Market capitalisation (market cap) is the total market value of a company’s outstanding shares. It is calculated by multiplying the current share price by the total number of shares issued.
Formula:
Market Cap = Current Share Price × Total Number of Shares Outstanding
For example, if a company has 10 crore shares and each share is trading at ₹500, its market cap is ₹5,000 crore.
What does it tell you?
Market cap gives you a quick sense of a company’s size. It is not the same as the company’s revenue or profit; it reflects what the market collectively believes the company is worth at a given point in time.
A higher market cap generally indicates a larger, more established company. A lower market cap could mean a smaller or newer company which may offer more growth potential but also comes with higher risk.
Easy & quick
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