Below is a market capitalization calculator. Enter a company's current trading price per share and its total shares outstanding to compute its market cap.
Market Capitalization Calculator
What is market capitalization?
Market capitalization or market cap is the total value of a company's equity. Multiplying the number of shares of a company outstanding by their price is one measure of a company's net worth or value in the market.
Market capitalization, again, only measures the equity value of a corporation. Enterprise value is a more extensive measure which includes the value of debt on the company's books, and nets out any cash.
Total market capitalization
Usually, market capitalization uses the number of shares currently trading to derive company's total equity value. However, companies issue equity as vesting employee compensation, have options outstanding, issue convertible debt or other instruments which can convert to common or preferred shares. Therefore, a conservative measure of market capitalization assumes all of those shares eventually convert and trade, and you can use the more pessimistic number in your calculations.
Market capitalization as a market measure
While market cap is usually a one-company metric, it can be used in aggregate. A well-designed index may include, for example, all publicly traded technology companies. Another index may consist of all public companies in one country.
By adding all the individual market capitalizations in an exhaustive index, market participants can get an idea of the relative value of categories of companies. Although geographies and categories can be squishy, comparing a country's market cap to its GDP may also signal whether its equity markets are reasonably priced.
Market capitalization in early-stage companies
Market cap – and revenue growth rate – is among the most important numbers associated with early-stage equity. In private equity rounds, angel investors and venture capitalists purchase preferred shares with a "pre-money" (not including the new investment) and "post-money" (after the new money is included). These investments effectively set the market capitalization of the firm.
These valuations also give an idea about what sort of multiples are possible on investor money. By finding comparable business models in the public markets and applying similar multiples to early-stage firms, investors can guess at a company's potential market capitalization if everything goes right.
Read more about MOIC and TVPI in early stage investing.
Market Capitalization Formula
The market capitalization formula is:
Market\ Cap =price\ per\ share*shares\ outstanding
Where:
- Price per share - the current trading price of a share of a company.
- Shares outstanding - the number of shares outstanding. (Optionally, compute fully diluted market cap with all possible shares that may be outstanding with other programs and financing activity of the firm)
