Nooby question bear with me...
Who cares about market capitalization if one company could have 5% of its equity outstanding in the form of stocks and another could have 50%? You see market capitalization everywhere but I don't understand how its any kind of useful thing to know about a company.
You are misunderstanding what equity is.
A stock is just a share of the company--it represents ownership of that company. So all of a company's stock together is the company itself. There is no "5% equity outstanding" or "50% equity outstanding". If you know how many stocks a company has, and you know the stock price, then you know the market cap. And that itself is the size of the company--100%.
no... market cap is market value of shares outstanding. you are assuming here that 100% of equity is trading.. That is not always true..
Market cap matters because size matters. If you invest $1M in a company with a $10B market cap, you're a drop in the bucket. You're getting larger percentage stake if you invest in a company with a $10M market cap, though. See the difference?
Good question, OP.. here are my 2 cents... market cap - to me - loosely indicates the impact one particular company can have on the stock market.. it means nothing to the average joe but I would assume it is used in the trading community to gauge the amount of "damage" one stock can do - kinda like boxers are classified into buckets based on their weight.
it's rather uncommon to have 100% equity trading as well
I'm sorry but you guys made me more confused lol
Mollitia consectetur quia autem a accusantium. Saepe mollitia labore et deserunt ratione.
Accusantium placeat quasi eius alias vero vel animi. Provident quis quia iure qui eos at eum eos. Perspiciatis unde enim a provident. Totam pariatur officia ipsum est dolorem.
Earum soluta magnam nobis perspiciatis officiis. Non sed voluptate saepe accusantium omnis voluptatem est. Harum vel et et iusto sequi. Est voluptatem quaerat est voluptas sunt nesciunt aut beatae. Et optio ut est praesentium quasi dolorem error esse.
Accusantium quasi laudantium dicta et omnis. Aliquid nihil velit odio autem.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...