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Market capitalization (Market Cap) is the total dollar value of all a company's outstanding shares of stock. It's a simple way to determine a company's size and market value, and it's commonly used by investors to compare companies within the same industry. In this article, we'll show how to calculate Market Cap, discuss its importance, and suggest strategies for improvement.
Here's the Market Cap formula:
Market Cap = Number of Outstanding Shares × Share Price
Let's consider a real-world example of calculating Market Cap for a well-known company, such as Apple Inc. We'll use the following data to calculate the Market Cap:
Multiply the Number of Outstanding Shares by the Share Price:
Market Cap = Number of Outstanding Shares × Share Price
Market Cap = 16,690,000,000 × $150
Market Cap = 2,503,500,000,000
This means that the total market value of Apple Inc.'s outstanding shares is approximately $2.5 trillion.
Market Cap is an important financial metric to understand for several reasons:
Here are some strategies that can help increase your Market Cap:
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