How to calculate the stock market cap is obtained from the number of company shares multiplied by the price.
There is a special formula in the calculation. Market cap is one of the terms in the investment world.
The term has a fairly important role and investors are obliged to understand it.
Market cap has a considerable influence on the fundamentals of a company.
With the market cap value, it becomes a factor of consideration for investors to invest in it.
As an investor, it’s good if you know what the definition of a stock market cap is and how to calculate it in the investment world.
Definition and How to Calculate Stock Market Cap
Before you know how to calculate it, you should know the definition of market cap first.
In the investment world, there are many terms that you can hear to indicate a certain activity or condition.
Like the market cap, which is commonly known as market capitalization.
Market cap is a measure based on the aggregate value of a company.
You can also get the market cap from the total number of transfers of the company’s outstanding shares at the price of one share on the market.
This term is usually used by investors in assessing the quality of a company, by knowing it, investors can determine how much total money they have to spend.
So you can buy the shares you want from a company.
If an investor wants to take 100% of the shares, of course he must pay the market cap itself.
The greater the market cap value, the company’s potential to be used as an investment is also large.
There is a certain formula to calculate it.
So by knowing the market cap value, it will be much easier to determine the company’s stock price.
Market Cap Calculation Formula
Actually, how to calculate the stock market cap, investors should know. There is value you can get. All systematically there is a calculation formula, namely:
Market cap = total shares outstanding X price per share
The example of how to calculate the stock market cap.
For example, a company XYZ has a total of 400 million shares outstanding.
The price per sheet is Rp. 1,500. From here we can calculate it with this formula.
Market cap = 400 million x IDR 1,500 = IDR 600 billion
From this calculation, investors can know if the value of XYZ’s company is Rp. 600 billion.
So when investors want to buy company XYZ, they need to pay for it at a price of Rp. 600 billion.
Factors Affecting Market Cap
Actually, how to calculate the stock market cap using the specified formula.
So investors can find out how much money you have to spend.
There are two factors that can affect the size of the market cap.
Public sentiment and the number of outstanding shares are two important factors.
People’s sentiments make the market cap value of some companies increase under certain conditions.
The situation on the number of shares also supports the adjustment of share prices.
Both will affect how to calculate the stock market cap.