Market capitalisation definition

Market capitalisation is the total market value of a company's shares. It equals the current share price multiplied by the number of shares outstanding, and it shows what the market thinks the whole company is worth.

The figure sorts companies by size: large-cap, mid-cap, and small-cap bands group shares by their market value, and many stock indices weight their members by it. Because the share price moves constantly, market capitalisation shifts through the trading day, while a new share issue or a buyback changes the share count that feeds the calculation.

Market capitalisation is not the same as enterprise value. Market capitalisation measures only the equity, the value of the shares, whereas enterprise value adds the company's debt and subtracts its cash to estimate the cost of buying the whole business. It also differs from the share price: the price values one share, while market capitalisation values the company, so a high share price alone does not make a company large.