Market capitalisation
Market capitalisation is the total market value of a company's ordinary shares: the current share price multiplied by the number of shares outstanding, used to size and compare listed companies.
See it move
A listed company has 40,000,000 shares outstanding, trading at €12.50 each. Market capitalisation is share price times shares outstanding: 40,000,000 × €12.50 = €500,000,000. If the price rises to €14.00 with the share count unchanged, market cap rises to 40,000,000 × €14.00 = €560,000,000, purely from the price move.
The formula
Variables
- Market capitalisation (€)
- Current share price (€ per share)
- Number of shares outstanding (shares)
Gives the total market value of a company's ordinary shares at the current price.
Check yourself
A listed company has 18,000,000 ordinary shares outstanding, currently trading at €7.40 per share. The company also carries €30,000,000 of net debt on its balance sheet. What is the company's market capitalisation?