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Market capitalization, often abbreviated to market cap, is a business term that refers to the aggregate value of a firm's outstanding common shares. In essence, market capitalization reflects the total value of a firm's equity currently available on the market. This measure differs from equity value to the extent that a firm has outstanding stock options or other securities convertible to common shares. The size and growth of a firm's market capitalization is often one of the critical measurements of a public company's success or failure. However, market capitalization may increase or decrease for reasons unrelated to performance such as acquisitions, divestitures and stock repurchases. Wall Street, Manhattan In economics, business refers to the social science of managing people to organize and maintain collective productivity toward accomplishing particular creative and productive goals. ...
Look up Aggregate in Wiktionary, the free dictionary. ...
Value as defined in economics is only a small subcategory of value in general, as defined in value theory or in the science of value. ...
Firm can have several meanings: Firm - a loose legal term for a company. ...
Common stock, also referred to as common shares, are, as the name implies, the most usual and commonly held form of stock in a corporation. ...
Ownership equity, commonly known simply as equity, also risk or liable capital, is a financial term for the difference between a companys assets and liabilities -- that is, the value that accrues to the owners (sole proprietor, partners, or shareholders). ...
Equity value is a market-based measure of the value of a firm. ...
Market capitalization is the number of common shares multiplied by the current price of those shares. The term capitalization is sometimes used as a synonym of market capitalization; more often, it denotes the total amount of funds used to finance a firm's balance sheet and is calculated as market capitalization plus debt (book or market value) plus preferred stock. In financial terminology, stock is the capital raised by a corporation, through the issuance and sale of shares. ...
A balance sheet, in formal bookkeeping and accounting, is a statement of the book value of a business or other organization or person at a particular date, often at the end of its fiscal year, as distinct from an income statement, also known as a profit and loss account (P...
Debt is that which is owed. ...
A preferred stock, also known as a preferred share or simply a preferred, is a share of stock carrying additional rights above and beyond those conferred by common stock. ...
The total market capitalization of all the companies listed on the New York Stock Exchange is greater than the amount of money in the United States [1]. The global market capitalization for all stock markets was $43.6 trillion in March 2006 [2]. New York Stock Exchange (June 2003) The New York Stock Exchange (NYSE) , also nicknamed the Big Board, is the largest stock exchange in the world in dollar volume and second largest by number of companies listed. ...
The examples and perspective in this article or section may not represent a worldwide view. ...
The examples and perspective in this article or section may not represent a worldwide view. ...
Valuation
- Main article: Business valuation
Market capitalization is a function of the price of a firm's stock and may not accurately reflect intrinsic value because of varying future expectations held by investors. It is common for a firm's market capitalization to exceed "book value" (shareholders' equity) because market prices tend to increase at a quicker pace than earnings accumulate due to value placed on expected future growth. For instance, in the late 1990s the shares of Internet-related companies were highly valued by the market, and tiny companies with almost no sales (but high growth) generated market capitalizations in the billions of dollars. A business valuation determines the price that a hypothetical buyer would pay for a business under a given set of circumstances. ...
The book value of an asset or group of assets is sometimes the price at which they were originally acquired (historic cost), in many cases equal to purchase price. ...
In business and accounting, the shareholders equity refers to the amount of assets that are owned by a companys shareholders. ...
The 1990s decade refers to the years from 1990 to 1999, inclusive. ...
The dollar (represented by the dollar sign: $) is the name of the official currency in several countries, dependencies and other regions. ...
"Float" The amount of shares available on the open market, the "free float", is sometimes less than the total number of shares because a portion of the outstanding shares may be held by "insiders," and/or by the company as treasury stock. In addition to the float being perhaps much smaller than the total number of shares, a significant portion of the float may be owned by large institutional investors who rarely trade. As a result, on any given trading day, generally only a small percentage of shares are traded, as in the example of Yahoo!, about 1.5% (20,025,727/1,180,000,000). In economics, the Open Market is the term used to refer to the environment in which bonds are bought and sold. ...
The free float of a public company is an estimate of proportion of shares that are not held by large owners and that are not stock with sales restrictions (restricted stock that cannot be sold unit they become unrestricted stock). ...
An insider is a member of any group of people of limited number and generally restricted access. ...
In the United Kingdom, treasury stocks refer to government bonds or gilts. ...
An institutional investor is an investor who is an institution like a bank, insurance fund, retirement fund, or mutual fund manager. ...
The sudden availability on the open market of all of a company's stock, as a result of both the insiders and the company selling all shares held, could cause a plummet in the stock price (if unexpected and not already priced in by the market).
Categorization of companies by market cap While there are no strong definitions for market cap categorizations, a few terms are frequently used to group companies by capitalization.
In the U.S., companies and stocks are often categorized by the following approximate market capitalization values:
- Small-cap: market cap below US$1 billion
- Mid-cap: market cap between US$1 billion and US$5 billion
- Large-cap: market cap exceeds US$5 billion
The small-cap definition is far more controversial than those for the mid-cap and large-cap classes. Typical values for the ranges are enumerated here: The United States dollar is the official currency of the United States. ...
The United States dollar is the official currency of the United States. ...
The United States dollar is the official currency of the United States. ...
The United States dollar is the official currency of the United States. ...
- Micro-cap: market cap under US$100 million
- Nano-cap: market cap under US$50 million
Blue chip is sometimes used as a synonym for a large-cap, while some investors consider any micro-cap or nano-cap issue to be a penny stock, regardless of share price. The United States dollar is the official currency of the United States. ...
The United States dollar is the official currency of the United States. ...
A blue chip stock is the stock of a well-established company having stable earnings and no extensive liabilities. ...
The terms Penny Stocks, Small Caps, Micro Caps and Nano Caps are often interchangeable. ...
Examples Examples of share valuation compared to market cap (price), and share ownership, from Yahoo! Inc. ([3], [4])
Valuation measures
Share statistics Enterprise value is a market-based measure of a companys value. ...
In finance, the PE ratio of a stock (also called its earnings multiple, just multiple, or P/E) is used to measure how cheap or expensive share prices are. ...
In finance, the PE ratio of a stock (also called its earnings multiple, just multiple, or P/E) is used to measure how cheap or expensive share prices are. ...
In finance, a PEG ratio is a financial ratio of a company. ...
A ratio used to evaluate Stocks. ...
Enterprise value is a market-based measure of a companys value. ...
To meet Wikipedias quality standards, this article or section may require cleanup. ...
In accounting and finance, EBITDA «ee-bit-dah» or «ee-bit-dee-eh» stands for Earnings before Interest, Taxes, Depreciation, and Amortization (sometimes named OIBDA for operating income before depreciation and amortization). ...
ttm = Trailing twelve months (or last twelve months) In business, the shares outstanding (example) is all company shares less eventual treasury stock (example). ...
An insider is a member of any group of people of limited number and generally restricted access. ...
An institution is a group, tenet, maxim, or organization created by a group of humans. ...
An institution is a group, tenet, maxim, or organization created by a group of humans. ...
In the United Kingdom, treasury stocks refer to government bonds or gilts. ...
Levels Main article: Equity levels and flows // Levels Levels mean market equity (stock, share) value. ...
Stock market capitalisation 2003 (compared with GDP converted to € through estimated purchasing power parity exchange rates) The examples and perspective in this article or section may not represent a worldwide view. ...
To meet Wikipedias quality standards, this article or section may require cleanup. ...
- EU: €6.0 trillion (59% of PPP GDP)
- Japan: €2.4 trillion (75% of PPP GDP)
- United States: €10.7 trillion (108% of PPP GDP)
One way to measure the "madness" is to measure the value of the stock market's overall capitalization to the size of the national Gross Domestic Product. Historically the stock market value has been about 58% of GDP. Lows were in the range of 37% in the early 1950s, and 25% at the bottom of the Great Depression. Highs in this measurement were around 75% and occurred at all the important market turning points in the last 80 years including 1929 and 1966. As recently as 1991, the market was at the historic 58% level of GDP.
Since 1991, all semblance to reality began to be lost in this particular measurement. By the 4th quarter of 1999 stock market capitalization had increased to an atmospheric and unprecedented 185% of total GDP! Even today in spite of a huge bear market, the rate is still a stratospheric 104%!
See also A financial ratio is a ratio of two numbers of reported levels or flows of a company. ...
Fundamental analysis is a security or stock valuation method that uses financial and economic analysis to predict the movement of security prices such as bond prices, but more commonly stock prices. ...
Growth Stocks in finance, are stocks that appreciate in value and yield a high return on equity (ROE). ...
Market price is an economic concept with commonplace familiarity; it is the price that a good or service is offered at, or will fetch, in the marketplace; it is of interest mainly in the study of microeconomics. ...
In investing, financial markets have market trends that can be classified as primary trends, secondary trends (short-term), and secular trends (long-term). ...
Technical analysis (or chartism) is the use of numerical series generated by market activity, such as price and volume, to predict future price trends. ...
Lists What follows is a list of over 250 Wikipedia articles on finance topics. ...
The following is a list of company by the greatest market capitalization. ...
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