What does market capitalization measure for a publicly traded company?

Market capitalization measures the market value of a publicly traded company’s outstanding shares.

The standard calculation is the current share price multiplied by the number of shares outstanding. For example, a company with one billion shares priced at $50 has a market capitalization of $50 billion.

This measure is used to compare the relative size of listed companies, including the world’s richest companies by market cap. It is different from revenue, which measures sales, and profit, which measures earnings after costs. It is also different from enterprise value, which incorporates debt and cash in a broader valuation measure.

Because share prices move during trading, market capitalization changes constantly. Rankings can therefore differ depending on the exchange closing time, currency conversion, share class treatment, and whether the calculation uses basic or fully diluted shares.