Market Capitalization - Market Cap

Market Capitalization is also known as market cap, it is the market value of publicly-traded company’s outstanding shares. It is calculated by multiplying the total number of a company’s outstanding shares by the current market price of per share. Since, outstanding stock is bought and sold In public markets, capitalization refers to company’s net worth and is a determining factor is some forms of stock valuation.

Market Capitalization Formula And Calculator

Formula of market cap calculation is MC = N X P

Where MC is the market capitalization

N is number of shares outstanding

P is the closing price per share

Keeping in view above formula, if a company has 2 million shares outstanding and closing price per share is $10, its market capitalization is then MC = 2million X 10 ($20 million market cap). If the closing price per share rises to $11, the market cap becomes $22million. If it drops to $9 per share, the market cap falls to $18 million. 


Not all of the outstanding shares trade on the open market. Only the free float shares are traded on the open market some of the shares are equal to or less than N because N includes shares that are restricted from trading. The restricted shares are promoting holding that why they are not allowed to trade on open market, promoters are the owner of the company.

Types of Market Capitalization India

  1. Large cap
  2. Mid cap
  3. Small cap
  4. Mega cap
  5. Micro cap
  6. Nano cap

There are only three main market cap term which are large cap, mid cap and small cap. There is no official definition for above terms it depends on country to country and the market regulator define the market cap of the company.

Market Capitalization Ranking

    1. Saudi Aramco-$2 Trillion

    2. Apple Inc.-$1.3 Trillion

    3. Microsoft Corp.-$1.3 Trillion

    4. Amazon-$1.2 Trillion

    5. Alphabet-$1 Trillion

Conclusion

Market Cap helps you to calculate the valuation of the company, market cap also refers to the net worth of the company. According to the market cap, its easy to specify the company size according there market cap, it will be a large cap if the market cap is very huge, it will be mid cap and small cap according to the market cap.

 

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