Definition
Market capitalization (market cap) is the total market value of a company's outstanding shares, calculated by multiplying share price by shares outstanding. It represents what the market values the entire company at. Market cap categories (small, mid, large, mega) help classify companies by size. While intuitive, market cap has limitations - it doesn't account for debt (enterprise value does) and can be distorted by share structure. Market-cap-weighted indexes like the S&P 500 give larger companies more influence.
Formula
Example
Apple at $175 per share with 15.5 billion shares has a $2.7 trillion market cap. If the price rises 10% to $192.50, market cap increases to $2.97 trillion, adding $270 billion in 'value.'
FAQ
What is Market Capitalization?
The total market value of a company's outstanding shares.
How do you calculate Market Capitalization?
A common formula for Market Capitalization is: 市值 = 当前股价 x 流通股总数
Why is Market Capitalization important?
Market Capitalization helps investors evaluate fundamental analysis and make more informed decisions.