How is market capitalization calculated?

Market capitalization is calculated by multiplying the number of shares outstanding by the current share price. This formula essentially assesses the total market value of a company's equity, giving investors and analysts a quick snapshot of the company's size and value in the stock market. It reflects how much investors are willing to pay for the company's shares at any given time, making it a crucial metric for evaluating a company’s financial standing and investment potential. Higher market capitalization typically indicates a more established company with a stable market presence, while lower capitalization could suggest a smaller or less stable company.