What Is Market Capitalization?
In finance, a company’s market capitalization refers to its total value, as measured by its stock. Market capitalization, or market cap for short, is equal to the price of one share of stock, multiplied by the number of shares in existence. For example, if the XYZ company has 15 million shares of stock, each valued at $7.50 U.S. Dollars (USD) per share, then XYZ’s market capitalization is $112.5 million USD. Investors use this value as one way to determine the value of a company. Of course, this value fluctuates from day to day, and from moment to moment during trading hours, as the price of the stock changes. Most of the time, market capitalization is divided into three broad categories. “Large cap” companies are those with a market cap of anywhere from $10 billion to $200 billion USD. Mid cap companies are those worth $2 billion to $10 billion USD, and those that trade as a whole between $300 million and $2 billion USD are in the small cap range. Sometimes, additional categories are
When you decide on the investment in a particular company you should study its market capitalization (also known as market cap). The latter represents a measure of the company’s size. In order to estimate it you should use the number of outstanding shares to multiple the current price of the stock. For example, if the price of a particular stock is $30 and there are 200,000,000 outstanding shares, then the market cap of the company will be $6.0 billion.
