Market Capitalization
Also known as: Market Cap, Equity Value
Market capitalization is the total value of a company’s outstanding shares, calculated as share price times shares outstanding.
Market capitalization, or market cap, is the total market value of a company’s equity. It is simply the share price multiplied by the number of shares outstanding.
What it tells you, and what it leaves out
Market cap measures the value of the equity alone. It does not account for debt or cash, which is why enterprise value is preferred for comparing the operating value of businesses. Two firms with identical market caps can be valued very differently once debt is included.
Size categories
Investors group companies by market cap into large cap, mid cap, small cap, and micro cap. These bands influence which funds can own a stock and how much trading liquidity it tends to have, which connects directly to a company’s public float.