Glossary
Market cap: definition
Market capitalisation is the share price multiplied by the number of shares the company has outstanding. It is what the market is currently paying for the equity. It is not what the company would fetch in a negotiated sale, and it ignores debt.
In practice
Large, mid and small caps are buckets of this number. They differ in liquidity and in how much of the index they dominate. Enterprise value, which adds debt and adjusts for cash, is often more useful when comparing businesses with different balance sheets. A rising market cap can be new shares issued, not only a rising price. Dilution hides inside the headline if you watch only the price.
A worked example
A company with a 10 share price and a billion shares has a 10 billion market cap. The same company with substantial debt is a larger enterprise than an all-equity firm with the same market cap.
Related
Sources and review
Last reviewed: 2026-10-13. Next review due 2027-04-13. Status: editorial review of this page, not a live verification of every third-party fee.
Author: WiT Markets Editorial, Editorial desk. The WiT Markets editorial desk writes explanatory pages, comparison context and research notes. It separates sourced facts from items that are not confirmed, and it does not provide personal recommendations.
Reviewed by: WiT Markets Research Review.
Primary and regulatory sources
- U.S. Securities and Exchange Commission — checked 2026-10-13