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Market Capitalisation
June 07 , 2012

Simply put, market capitalisation or market cap is what a listed company is totally worth. To get the market cap of a company, you just multiply the total number of outstanding shares, with the latest share price of the company. This is useful in the sense that helps to get an idea of the size of a company. Shares of a company that have been issued for sale and held by investors are known as outstanding shares.

Roughly, we can categorize companies with market cap above Rs 5000 crore as large, between Rs 1000 - Rs 5000 crore as mid and below Rs 1000 crore as small companies. That said, the precise numbers for market cap aren't very useful.

For one, they change every day as share prices fluctuate, often without any corresponding change in the company fundamentals. More importantly, the shares are widely dispersed in the market between promoters, institutions and retail shareholders. Thus, the actual cost of someone trying to buy out the company completely may be very different for different types of shareholders.

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