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What Is Market Cap? Definition and Calculation

Market capitalization, or market cap, is a measure of the total value of a publicly traded company's outstanding shares of stock. It is calculated by multiplying the number of outstanding shares by the current market price of one share. For example, if a company has 1 million shares outstanding and the current market price of one share is $50, the company's market cap would be $50 million. Market cap is often used as a measure of a company's size and is a key indicator of its financial health. It is also used to compare companies in the same industry or sector.

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