Market capitalisation
Also called: market cap, market capitalization, mcap
The total market value of a company's shares, calculated as the share price multiplied by the number of shares outstanding.
Market capitalisation = current share price × total shares outstanding. It tells you how big a company is in the market's eyes, which the share price alone cannot.
It changes every time the share price changes, reflects only the value of the shares (not the company's debt), and is the market's opinion rather than a measurement of what the business is truly worth. Companies are often grouped as large cap, mid cap or small cap by ranking their market capitalisation.
Example
A company with 25 crore shares trading at ₹480 has a market capitalisation of ₹12,000 crore.
Learn more in these lessons
- Market capitalisationWhat is market capitalisation and how is it calculated?
- Nifty 50 and SensexWhat do the Nifty 50 and Sensex measure?
- Common stock market mythsWhich common beliefs about the stock market are wrong?
- The P/E ratioWhat does a P/E ratio tell you about a share?
- Enterprise valueWhat is enterprise value, and why is it different from market capitalisation?
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