Financial Terms / M - N / Market capitalization

Market capitalization

A company's market capitalization is calculated by multiplying the number of outstanding shares by the price of a single share. For example, if a company has issued 100,000 shares and the price per share is currently trading at $100, the Market capitalization is $10,000,000.

Market cap fluctuates as the price of the stock increases/decreases or if more shares are issued to raise capital. Companies with large market caps are usually bigger and more mature than those with small market caps and are more conservative investments.