What financial measure ranks public companies by share price multiplied by shares outstanding?

Market capitalization ranks public companies by multiplying their share price by the number of outstanding shares.

The calculation is simple: market cap equals current share price multiplied by outstanding shares. For example, a company with one billion shares priced at US$50 would have a market capitalization of US$50 billion.

Market cap measures the value investors place on a company’s equity. It is commonly used to compare publicly traded businesses, although share prices change constantly and different share classes can complicate the calculation.

Market capitalization is not the same as enterprise value. Enterprise value also considers debt, cash, and other claims on the business. Nor is market cap the same as revenue, assets, or profit. These distinctions explain why a company can rank highly by market value without being the largest by sales.