About the Market Capitalization Calculator
Market capitalisation is the simplest valuation in finance: share price x shares outstanding. It states what the market currently charges for all the equity in a company. Share price alone says nothing about size, since a firm with a 900 unit price and two million shares is far smaller than one at 12 with a billion shares in issue.
Free float refines the picture. Promoters, founding families, governments and strategic partners often hold blocks that never trade, so the value genuinely available to public investors is smaller than the headline. Index providers weight members by free float capitalisation for that reason, and a low float also explains why a share price can move violently on modest volume. Enter the percentage that trades freely and both figures appear side by side.
The size band uses the usual US dollar conventions: mega cap above 200 billion, large above 10 billion, mid above 2 billion, small above 300 million, micro above 50 million and nano below that. Bands matter because many funds have mandates restricting them to one segment. Remember what capitalisation leaves out. It ignores debt and cash completely, so a leveraged company looks cheap on this measure alone. Add the balance sheet with the Enterprise Value Calculator before comparing two businesses.
How to use
- Enter the latest traded share price.
- Type the number of shares outstanding from the latest filing, diluted if options matter.
- Set the free float percentage if part of the register is closely held.
- Check the size band and the value of one percent of the company at the bottom of the result.
Common questions
- Should I use basic or diluted shares?
- Diluted is safer when options and convertibles are material, because those shares will exist if the instruments are exercised.
- Does market cap include debt?
- No. It values the equity only, which is why enterprise value exists for comparing companies with different borrowings.
- What is free float capitalisation used for?
- Index weighting and liquidity analysis. It reflects the shares that can actually change hands rather than the whole register.
- Do the size bands apply to every market?
- The thresholds are dollar conventions from US practice. Smaller exchanges apply their own cut offs, so treat the band as a rough guide.