Home
Back
Market Cap Formula:
| From: | To: |
Market capitalization (market cap) is the total dollar market value of a company's outstanding shares of stock. It is calculated by multiplying the total number of a company's outstanding shares by the current market price of one share.
The calculator uses the market cap formula:
Where:
Explanation: This simple calculation provides the total market value of a company, which is a key metric for investors to evaluate a company's size and compare it with others in the market.
Details: Market capitalization is crucial for investors to determine a company's size, risk profile, and growth potential. It's used to categorize companies into large-cap, mid-cap, and small-cap, which helps in portfolio diversification and investment strategy.
Tips: Enter the current stock price in dollars and the total number of outstanding shares. Both values must be positive numbers for accurate calculation.
Q1: Why is market cap important for investors?
A: Market cap helps investors understand a company's size, compare companies within the same industry, and make informed decisions about risk and potential returns.
Q2: What are the different market cap categories?
A: Generally, large-cap ($10B+), mid-cap ($2B-$10B), and small-cap ($300M-$2B). These categories help investors diversify their portfolios based on company size and risk.
Q3: Does market cap indicate a company's actual value?
A: Market cap represents the market's perception of a company's value, which may differ from its book value or intrinsic value based on fundamentals.
Q4: How often should market cap be calculated?
A: Market cap changes constantly as stock prices fluctuate throughout the trading day. For most purposes, using end-of-day prices provides a reliable daily valuation.
Q5: Can market cap be manipulated?
A: While stock prices can be influenced by various factors, market cap itself is a straightforward calculation based on publicly available information about share price and outstanding shares.