Market capitalisation

Market capitalisation is the total value the stock market places on a company. It is calculated by multiplying the current share price by the number of shares outstanding.

The formula is: Share price x Shares outstanding.

Market cap is the figure used as the starting point for most valuation ratios, including price to earnings and price to book. It changes constantly throughout the trading day as the share price moves, even though the number of shares outstanding rarely changes. A company can be worth more or less from one moment to the next without anything about the underlying business actually changing, simply because the market's view of the stock has shifted.