What financial measure is calculated by multiplying a public company’s share price by its outstanding shares?

Market capitalization is calculated by multiplying a public company’s share price by its outstanding shares.

The result estimates the total equity value that the stock market assigns to the company. For example, a company with 1 billion shares priced at $50 has a market capitalization of $50 billion. Rankings of the world’s richest companies commonly use this measure to compare listed businesses.

Market capitalization is different from revenue, profit, assets, and enterprise value. It can change every trading second because share prices move. It can also change when a company issues shares, buys shares back, or completes a stock split, even if the underlying business has not changed immediately.

Because market cap reflects equity only, it does not directly subtract debt or add cash. Enterprise value makes those adjustments and is often used when comparing the value of entire operating businesses.