Market Capitalisation
Market capitalisation is the total market value of a company’s shares — the share price multiplied by the number of shares outstanding. It is the standard measure of company size.
Market cap answers a simple question: what would it cost, at today’s price, to buy every share of this company? A business with 10 million shares trading at 50 has a market cap of 500 million. Share price alone says nothing about size — a company with a high share price and few shares can be far smaller than one with a low price and many.
Companies are commonly grouped as large-cap, mid-cap, and small-cap. The thresholds vary by market and by index provider, so the labels are conventions rather than fixed rules. Larger companies tend to be more liquid and less volatile; smaller ones can grow faster but are more sensitive to shocks.
Market cap is not the same as enterprise value. Enterprise value adds net debt to market cap, which better reflects what an acquirer would actually pay to own the business outright, since they inherit its debts as well as its assets.
Most major stock indices weight their members by market cap, meaning the largest companies dominate index performance. This is why a handful of very large firms can move an entire index even when most of its members are flat.
TrustFinance News tracks index moves and the companies driving them, so readers can see when a benchmark’s direction reflects the whole market or just its biggest constituents.