What Does Market Cap Mean?

The market cap of a company is the value of a company calculated by multiplying the number of shares outstanding by the last known stock price. Not all companies can be valued based on their market capitalization, however this is a good method to approximate the value. It is also important to remember market capitalization or "market cap" does not mean the same thing as equity value.

For example - If a company has 25 million outstanding shares, each with a market value of $10, the company's market capitalization is $250 million (25,000,000 x $10 per share).