In stock-market terminology, what is a company’s market capitalization?
Answer
Share price times shares outstanding
In stock-market terminology, a company’s market capitalization is its share price multiplied by its shares outstanding.
Market capitalization estimates the market value of a company’s equity. For example, if a company has 100 million outstanding shares priced at $20 each, its market capitalization is $2 billion. Because share prices change during trading, market capitalization can change even when the number of shares stays constant.
Market capitalization is not the same as enterprise value. Enterprise value also considers debt and cash, making it a broader measure of the value of the operating business. Market-cap labels such as large-cap and small-cap are commonly used, but their exact boundaries can vary by market and index provider.