Calculating Market Cap

Use the following formula to calculate market cap.

Market Cap = Share price * Total outstanding shares

The following are the classification of companies based on the size of its market cap.

Large Cap – Companies with a market cap above $10 billion are classified as large-cap stocks. Some examples would be Apple, Microsoft, IBM, Facebook, etc.

Mid Cap – Companies whose market cap ranges from $1 billion to $10 billion. Mid-cap stocks, in general, are more volatile than large-cap stocks and consist more of growth-oriented stocks.

Small Cap – Companies with a market capitalization between $250 million to $1 billion. They are high risk and high return stocks as the companies are in the growth stage. A large number of companies belong to the small-cap category.

Micro Cap – They are the penny stocks that are relatively young. The micro-cap companies’ potential for growth and decline are of similar nature. They are not considered to be the safest investment. Hence, they require lots of research before investment.