What is the market capitalization of a company calculated by multiplying its share price by what?

A company’s market capitalization is calculated by multiplying its share price by its shares outstanding.

This formula estimates the total market value of a company’s publicly issued equity. For example, a company with 1 billion shares trading at $20 per share has a market capitalization of $20 billion.

Market capitalization differs from revenue, profit, and total assets. Revenue measures sales, net income measures earnings after expenses, and assets measure resources owned or controlled by a business. None of those figures alone gives the stock-market value.

Investors often use market cap to compare companies by size. The ranking can change quickly because share prices move during trading, while the number of shares can change through buybacks, new issuance, or stock splits.