What is the standard formula used to calculate a public company’s market capitalization?

A public company’s market capitalization is calculated as its share price multiplied by its shares outstanding.

For example, if a company has 10 billion shares trading at $20 each, its market capitalization is $200 billion. The figure estimates the total market value of the company’s outstanding common equity at that moment.

Market capitalization is central to rankings of the world’s richest or most valuable companies. Because share prices change throughout each trading session, these rankings can change even when a company has not issued or repurchased any shares.

Market capitalization is not the same as revenue, profit, or enterprise value. Enterprise value adds debt and certain other claims while subtracting cash and equivalents. Market-cap rankings usually compare equity values alone, which is why they can differ from rankings based on business sales or assets.