Market Capitalization of Stocks | Summary and Q&A

TL;DR

Market capitalization is calculated by multiplying the number of outstanding shares by the price per share, with "m" representing million, "b" representing billion, and "k" representing thousand.

Key Insights

• ✖️ Market capitalization is calculated by multiplying the number of shares outstanding by the price per share.
• 🔙 The units "M," "B," and "K" represent million, billion, and thousand, respectively.
• ✊ To simplify market capitalization figures, divide it by a power of ten.
• 🍹 The number of outstanding shares is the sum of float and restricted shares.
• ❓ Market capitalization provides the total value of a company's shares.
• 🇦🇪 Understanding unit conversions is important for simplifying market capitalization values.
• ❓ Market capitalization gives an indication of a company's size and value in the market.

Transcript

in this video we're going to talk about market capitalization of stocks so in this problem company xyz has 42 million shares outstanding and a market price of 24.50 per share what is the market capitalization of company xyz so what's the formula to calculate market cap the market capitalization is equal to the number of shares outstanding times the... Read More

Questions & Answers

Q: What is market capitalization, and how is it calculated?

Market capitalization is the total value of a company's outstanding shares. It is calculated by multiplying the number of outstanding shares by the price per share.

Q: How do you simplify the market capitalization figures?

To simplify market capitalization figures, you can divide the total value by a power of ten. For example, dividing by 10^9 converts billion, and dividing by 10^6 converts million.

Q: What is the difference between float and restricted shares?

Float refers to the number of shares available for trading in the open market, while restricted shares are usually owned by executive officers. The number of outstanding shares is the sum of both float and restricted shares.

Q: How do you convert million (M) to billion (B)?

To convert million to billion, divide the million value by one thousand, as one billion is equal to a thousand million.

Summary & Key Takeaways

• Market capitalization is calculated by multiplying the number of outstanding shares by the price per share.

• The formula for market capitalization is: Market Cap = Shares Outstanding * Share Price.

• "M" represents million, "B" represents billion, and "K" represents thousand.