Understanding Market Capitalization
Understanding Market Capitalization NIVETHITHA DHAMODARAN Introduction: Market capitalization, often referred to as "market cap," is a fundamental concept in the world of finance that plays a crucial role in determining the size and value of a publicly traded company. It serves as a key indicator of a company's standing in the market and is a metric widely used by investors, analysts, and financial experts. In this blog post, we will delve into the concept of market capitalization, its significance, calculation methods, and its limitations as a valuation tool. Understanding Market Capitalization: Market capitalization is the total value of a company's outstanding shares of stock. In essence, it represents the market's collective perception of a company's worth. It is calculated by multiplying the current market price of a single share by the total number of outstanding shares. This metric provides valuable insights into the company's size relative to its...