Market Capitalisation
Market cap is the total market value of a company's outstanding shares.
Market capitalisation is calculated by multiplying the share price by the number of shares outstanding. It is the standard measure of a company's size in equity markets and determines index membership for indices like the S&P 500 and FTSE 100.
Companies are loosely grouped by market cap: large-cap (typically above $10bn), mid-cap, and small-cap. Larger companies tend to be more liquid and less volatile, while smaller companies historically offer higher growth potential with higher risk.
Example
A company with 2 billion shares trading at $150 each has a market cap of $300bn.
Further Reading
Burton Malkiel's evidence-based guide to markets, indexing and long-term strategy.
Check Price →A dedicated finance calculator for TVM, NPV and rate-of-return work.
Check Price →Robert Kiyosaki's bestseller on assets, liabilities and financial literacy.
Check Price →Related terms
Recommended Reading & Tools
As an Amazon Associate we earn from qualifying purchases. Links below are affiliate links.
How company size, indices and market efficiency fit together.
Check Price →A dedicated finance calculator for TVM, NPV and rate-of-return work.
Check Price →Morgan Housel's short lessons on behaviour, luck and long-term wealth.
Check Price →