The market value of a company calculated by multiplying its share price by diluted shares outstanding.
How it works
Market capitalization multiplies the current share price by shares outstanding. It is widely used to compare company size and construct market-cap-weighted indices.
Example
A company with 100 million shares at 25 per share has a market capitalization of 2.5 billion.
Limitations
Market capitalization is not enterprise value and does not measure revenue, cash, debt, profitability, or intrinsic value. Share-count definitions and multiple share classes require care.
Evidence LedgerHow this insight was built
Human reviewedThesis being tested
This definition explains Market Capitalization accurately, with its practical use and material limitations.
Key assumptions
- The named calculation or convention is stated where definitions vary.
- The example is illustrative and not a forecast or recommendation.
What could invalidate the view
- A different market, instrument, jurisdiction, or methodology may use the term differently.
- The cited authority may revise its guidance or terminology.
- Editorial ownership
- Market Master · reviewed
- Approval state
- Reviewed financial content
- Evidence currency
- Current evidence window
- Source coverage
- 2 documented sources
Sources used for this insight