The stock-market value of a company's equity, in millions. It is calculated by multiplying the current share price by the number of shares outstanding as of the most recently completed fiscal quarter.
Benefit
Market cap is an often used indicator of a stock’s size. Stocks with market caps of less than $1 billion are often referred to as small-cap stocks, while market caps of more than $5 billion generally denote large-cap stocks.
Origin
The number of shares outstanding is taken from the company’s most-recent financial statement. The company’s current share price is received from ComStock, a division of Interactive Data Corporation.This information is updated daily.
For the Pros
Use the following formula as a value method, when you’re looking for cheap stocks. The higher the number, the cheaper the stock:
((Current Assets Quarter 1 – Current Liabilities Quarter 1) / Market Capitalization) x 100
Use the following formula as another valuation measure, similar to Price/Cash Flow:
Market Capitalization/Free Cash Flow Year 1