what is the meaning of market capitalization? is it the same as net worth of a company?


4 Answer(s)


No market cap is not the same as net worth.
Net worth is the book value (Assets - Liabilities).
Market Cap = Number of shares of the company x Share price of the company
The market cap of a company is the value of all the company shares trading in the stock market. The market cap could be higher or lower than the book value. In most cases it is higher.

For example you can get Apple's market cap here - https://www.google.com/finance?q=aapl&ei=Jt7DUfCoAsqxkgWsTg

For book value you need to look at the balance sheet

Market Cap = No. of outstanding Shares * Share Price
This keeps on changing with the price of the share. You can check market cap of any company on moneycontrol

New Worth = Total Asset - Total Liabilities

If the market cap is lower than the net worth then the share can be considered a good buy cuz it means that at current price level share is trading even lower than it's book value and it might move further up.


Market Cap = Number of shares of the company x Share price of the company
The market cap of a company is the value of all the company shares trading in the stock market.

Simple formula to calculate Networth = Assets - Liabilities.
A broader formula is:
Networth = Share Holders fund + Reserves - Intangible Assets.
Networth = Total Assets - Intangible Assets - Total Debt - Current Liabilities.