### Market Capitalization Calculation

Definition: Market capitalization (often referred to as market cap) is a measure of the size of a company. It tells you the value of the shares of a company. Investors often use the market cap to determine how big a company is. Traditionally, companies are divided into three groups: small cap, mid cap, and large cap. Small Cap refers to stocks with market cap of less than \$1 billion. Mid Cap stocks are generally considered to be those with capitalizations between 1 billion to \$10 billion. Large Cap stocks are generally defined by the company having a market cap of more than \$10 billion.

Market capitalization can be calculated by simply multiplying the number of the outstanding shares of stock by the market price per share.

Formula:

Market capitalization = Number of outstanding shares * Current share price

Example 1:
If a company has 20,000,000 shares trading at \$2 per share, its market cap would be: 20,000,000 * 2 = \$40,000,000.

Example 2:
MBB Company has 60,000,000 shares outstanding, and each share is currently selling for \$70. The company's market cap would be: 60,000,000 * \$70 = \$4.2 billion.

* Next: Market to Book Ratio Analysis & Example