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Market Capitalization Formula:
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Market capitalization (market cap) is the total dollar market value of a company's outstanding shares of stock. It is calculated by multiplying the company's shares outstanding by the current market price of one share.
The calculator uses the market capitalization formula:
Where:
Explanation: This calculation represents the theoretical cost to buy all of a company's outstanding shares at the current market price.
Details: Market cap is a key metric used to determine a company's size, compare companies within the same industry, and categorize companies into different size classifications (small-cap, mid-cap, large-cap).
Tips: Enter the current stock price in dollars and the total number of shares outstanding. Both values must be positive numbers.
Q1: What's the difference between market cap and enterprise value?
A: Market cap only considers equity value, while enterprise value includes debt, minority interest, and preferred shares, minus cash and cash equivalents.
Q2: How often should market cap be calculated?
A: Market cap changes constantly as stock prices fluctuate throughout the trading day. It's typically calculated using the most recent closing price for daily comparisons.
Q3: What are the different market cap categories?
A: Companies are typically categorized as: Large-cap ($10B+), Mid-cap ($2B-$10B), Small-cap ($300M-$2B), and Micro-cap ($50M-$300M).
Q4: Does market cap indicate investment quality?
A: While larger companies are generally more stable, market cap alone doesn't indicate investment quality. It should be considered alongside other financial metrics.
Q5: How does stock dilution affect market cap?
A: When companies issue additional shares, it increases shares outstanding but typically decreases stock price, potentially keeping market cap relatively stable if the new capital is used effectively.