WHAT IS MARKET CAPITALIZATION ?
Market capitalization, sometimes known as “market cap,” is the entire market value in US dollars of all outstanding shares of a company’s stock. Instead of looking at revenue or total asset worth, investors use this number to assess a company’s size. The market capitalization of a takeover candidate aids in evaluating whether the acquirer will receive a decent deal from the deal.
Methods for Calculating Market Capitalization
By multiplying the share price by the total number of shares that are available and extrapolating the market’s assessment of a publicly listed company’s value, market capitalization calculates the company’s worth. The dynamics of supply and demand govern a company’s share price once it becomes public and starts trading on an exchange. The market capitalization serves as a real-time approximation of the company’s value as market prices fluctuate. The following is the market capitalization formula:
Market Cap is calculated as follows: Current Share Price x Total Outstanding Shares=COMPANY VALUE
or Market capitalization company.
EXAMPLE
A company with 20 million shares selling at $100 a share has a market cap of $2 billion. A second company with a share price of $1,000 but only 10,000 shares outstanding, has a market cap of $10 million.
Market Cap and Company Size
- Large-cap companies typically have a market capitalization of $10 billion or more and represent major players in well-established industries and sectors.1 These companies generally reward investors with a consistent increase in share value and dividend payments. Examples of large-cap companies include Apple Inc., Microsoft Corp.,………etc.
2. Mid-cap : The market capitalization of mid-cap corporations typically ranges from $2 billion to $10 billion.
Two mid-cap companies are involved in an industry that is anticipated to grow rapidly. Compared to large-cap corporations, mid-cap companies are intrinsically riskier and are often expanding. Eagle Materials Inc. is one instance of a mid-cap business (EXP).
3. Small-cap firms are sometimes defined as those having a market valuation of between $250 million and $2 billion.
You can find more about this on Investopedia.