Market Capitalization

The Market Capitalization ( Market Cap ) is used to value a company. It states the total value of a firms outstanding shares.

The Formula looks like this

( Number of outstanding shares ) / ( Market Price )

The investment community considers this to be a good evaluation of a company’s size. The Market Cap is broken down to 3 different parts, Large Caps, Medium Caps, and Small Caps.

Large Caps = 10 billion and over

Medium Caps = 2 billion to 10 billion

Small Caps = under 2 billion

While the market capitalization is used frequently by investors it may not tell the whole story. It does not take into consideration the Assets and liabilities or Sales of the underlined company.