Market Capitalization (Market Cap): Definition
Market capitalization equals share price multiplied by shares outstanding. It is a quick way to size a company and is used to compare companies of similar scale.
Basic Formula
Fully diluted market cap includes in-the-money options and convertible securities. Float-adjusted market cap uses free-float shares excluding restricted/insider-held shares.
Notes
- Market cap changes with price — it is a market-implied size, not a static accounting measure
- Prefer fully diluted market cap when comparing companies with active option programs
- For index weighting and peer comparisons, confirm whether the dataset uses basic, diluted or float-adjusted market cap
- Market cap is often used to define market segments (large-, mid-, small-cap) but exact cutoffs vary by provider