Market Capitalization

Market cap is the quickest way to gauge a company's size. Multiply the current share price by the shares outstanding and you get the market's estimate of the whole company's equity value.

Companies are commonly grouped into large-cap, mid-cap, and small-cap tiers. Large caps tend to be more stable and liquid, while small caps offer more growth potential alongside more risk.

Market cap also drives how index funds weight their holdings, since most major indexes are cap-weighted. That means the largest companies exert an outsized influence on how the overall market moves.