19/04/2014 15:38:07 Free Membership Login
If your page isn't loading correctly please Click here
Basic ADVFN Video Help
ADVFN HomeHelpGlossaryMarket Capitalisation
  American style warrant
  Belt Hold
  Covered Warrants
  Engulfing Patterns
  European style warrant
  Hanging Man
  Inverted Hammer
  Market Capitalisation
  Price to Sales Ratio (PSR)

Market Capitalisation

Perhaps one of the most basic and important concepts to understand if you are risking your money on the sharemarket.

The price of a share does not nessesarily reflect the value that the market has placed on the company you are looking at. The value of a company on the stockmarket is represented by the amount of money invested in shares that are in circulation. So company value is the price of the share multiplied by the number of shares currently in issue.

Company A Share price 50
Number of shares issued 500 million
Market Capitalisation = 250 million

Company B Share price 150
Number of shares issued 10 million
Market Capitalisation = 150 million

So company A has greater value on the stockmarket than company B even though company B has a higher share price.

Related topics
Toplists Market Cap/Turnover
Price to Sales Ratio

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

1 site:2 us 140419 15:38