• Market capitalization refers to how much a company is worth, as determined by the stock market. It is defined as the total market value of all issued shares.

  • To calculate a company’s market capitalization, multiply the number of shares outstanding by the current market value of one share.
  • Companies are usually divided according to market capitalization: large cap ($10 billion and above), mid cap ($2 billion to $10 billion) and small cap ($300 billion to $2 billion).
  • Market capitalization is often used to determine the size of a company and then to evaluate the company’s financial performance in comparison to other companies of different sizes.
  • When investing, companies with higher market caps are often safer investments as they represent more established companies with longer business histories.