Market Capitalization explained

What is market capitalization? How to calculate market capitalization, and how to interpret market cap?

In this video, we start off with the definition of market capitalization, we go through an example of calculating market capitalization, discuss grouping companies by size of market cap, dive into the meaning of companies having a low market cap or high market cap, and discuss how market capitalization relates to takeover bids.

⏱️TIMESTAMPS⏱️
0:00 Introduction
0:30 Definition of market capitalization
0:50 Market capitalization formula
0:59 Calculating market capitalization
2:40 Market cap categories
3:37 Reasons for low market cap versus high market cap
6:41 How market capitalization relates to takeover bids

The definition of market capitalization. Market capitalization (or in short: market cap) is the market value of a company based on the total value of all its publicly traded outstanding shares. This implies that you cannot calculate a #marketcapitalization for companies that are not publicly listed. The formula for calculating #marketcap is simply to take the number of outstanding shares and multiply it by the share price.

Philip de Vroe (The Finance Storyteller) aims to make strategy, finance and #investing enjoyable and easier to understand. Learn the business and accounting vocabulary to join the conversation with your CEO at your company. Understand how financial statements work in order to make better stock market #investing decisions. Philip delivers financetraining in various formats: YouTube videos, classroom sessions, webinars, and business simulations. Connect with me through Linked In!

[ronaldramireznavas]

Congratulations and thanks a lot. It was a very good explanation about the concept, finally I find more than a just the formule.

[QualitativeInvestor]

Philip,
Can you please record a video for Enterprise Value.
Which is the amount it would cost an investor to buy the whole company, lock, stock and barrel.
Enterprise Value is a theoretical takeover price. It is more comprehensive than market capitalization (market cap), which only includes common equity.
And also why Enterprise Value calculated as: Market Cap+Total Debt−Cash

[xierli]

In case of M&A, what is the process by the acquiring company, is it like announcing they are going to buy outstanding shares in the market 20-30% higher than the current share market price to the existing shareholders? What happened if some or all refused to sell their shares? Will they increase the premium?

[SomebdyDay]

Absolutely brilliant! Let me donate to you!