Market Cap

Market capitalisation is the share price multiplied by the number of shares outstanding — what the market thinks the whole company is worth. At 100 a share with 10 million shares, the market cap is 1 billion. It is the company's price tag.

This is why share price alone cannot tell you how big a company is. A firm trading at 5 can be far larger than one trading at 500; the only difference is how many slices the ownership was cut into.

Companies are usually sorted into large, mid and small cap. Large caps are steadier but harder to double, small caps swing more but have further to run. Most indices also select their members by market cap.

Market cap carries expectation as well as substance, so it can drift from real value. Loss-making companies sometimes carry huge caps on future hopes, while solid businesses stay overlooked. Read it next to revenue and profit.