Market Capitalization Calculator
Market cap, fully diluted cap and enterprise value side by side, because a buyer takes on the debt and keeps the cash and market cap ignores both.
Share price $42.60
Shares in issue 184,000,000
Market capitalisation $7,838,400,000.00
band mid cap, on the usual US dollar boundaries
Fully diluted $8,370,900,000.00
extra shares 12,500,000, 6.79% more
the difference $532,500,000.00
Enterprise value $8,685,900,000.00
market cap $8,370,900,000.00
plus debt $410,000,000.00
less cash $95,000,000.00
which is what a buyer pays for the whole business, debt included
against market cap 1.04×
Free float
share of the company 68%
float capitalisation $5,330,112,000.00
which matters because index weights and tradable liquidity follow the float, not the whole company
Multiples
price to earnings 25.12×
earnings per share $1.5878
earnings yield 3.98%
price to sales 2.70×
enterprise value to sales 3.00×
Market capitalisation is $7,838,400,000.00 and enterprise value is
$8,685,900,000.00. The first is what the equity is worth; the second is
what the whole business costs, because a buyer inherits the
$410,000,000.00 of debt and keeps the $95,000,000.00 of cash. Comparing
two companies on market cap alone compares them on how they happen to be
financed.
The fully diluted count adds 12,500,000 shares, which is 6.79% more and
$532,500,000.00 of value. Options, restricted stock and convertibles all
become shares eventually, so per-share figures on the basic count
flatter the company.
A price is the marginal share, not every share. On a thinly traded stock
the last trade priced a small parcel; multiplying it by the whole share
count produces a number nobody could realise, in either direction. That
is also why a takeover happens at a premium: buying every share costs
more than buying one.
Free float is what index funds see. Index weights and tradable liquidity
follow the float rather than the full count, which is why a company that
is 80 percent founder-owned trades thinly and moves sharply on ordinary
volume.
Price to earnings compares a price with a single year of profit, so it
is a statement about expectations. A low one is not cheap and a high one
is not expensive without a view on what happens next, and a loss-making
company has none at all.
Enterprise value is the right numerator for operating multiples. EV to
EBITDA and EV to sales compare like with like across companies with
different debt; price to earnings does not, which is the single most
common comparison error in valuation.
Market cap changes without the business changing. It moves on the last
trade, and on a quiet day that trade can be small. Treat a daily change
as information about the market rather than about the company.
Output is valid and updates as you type.
Fix the highlighted fields to update the output.
Market capitalisation is shares times price. It is not what the company is worth to a buyer, because a buyer takes on the debt and keeps the cash.
That figure is enterprise value: market cap plus debt less cash. On the example below the equity is worth $7.84 billion and the business costs $8.69 billion, and for a more leveraged company the gap is far wider. Comparing two companies on market cap alone compares them on how they happen to be financed.
Two other things get assumed quietly. Whether the share count is basic or fully diluted, which matters whenever options and convertibles are outstanding. And whether the price means anything: on a thinly traded stock, the last trade priced one small parcel of shares.
How to use
- Put in the price and the shares in issue.
- Add the diluted count, the debt and the cash.
- Add earnings and revenue for the multiples, and read enterprise value next to market cap.
Example
Market capitalisation $7,838,400,000.00
band mid cap, on the usual US dollar boundaries
Fully diluted $8,370,900,000.00
extra shares 12,500,000, 6.79% more
the difference $532,500,000.00
Enterprise value $8,685,900,000.00
plus debt $410,000,000.00
less cash $95,000,000.00
Free float
share of the company 68%
float capitalisation $5,330,112,000.00
Multiples
price to earnings 25.12×
earnings per share $1.5878
earnings yield 3.98%
price to sales 2.70×
enterprise value to sales 3.00×Pitfalls
Market cap is not the price of the company. A takeover happens at a premium, because buying every share costs more than buying one, and the buyer also settles the debt. Enterprise value is the figure that answers “what would this cost”.
Diluted, not basic, for anything per share. Options, restricted stock and convertibles all become shares eventually. Earnings per share on the basic count flatters the company, which is why both figures are published and why the diluted one is the honest denominator.
A price is the marginal share. On a quiet day the last trade might be a few thousand shares. Multiplying it by a billion shares produces a number nobody could realise in either direction.
Free float is what index funds see. Weights and tradable liquidity follow the float rather than the total count, which is why a company that is 80 percent founder-owned trades thinly and moves sharply on ordinary volume.
Enterprise value is the right numerator for operating multiples. EV to EBITDA and EV to sales compare like with like across different debt levels. Price to earnings does not, which is the commonest comparison error in valuation.
Price to earnings says nothing on its own. It compares today’s price with one year of profit, so it is a statement about expectations. A low figure is not cheap, a high one is not expensive, and a loss-making company has none at all.
The bands are dollar conventions, not definitions. Small cap, mid cap and large cap boundaries vary between index providers and are quoted in US dollars, so applying them to another currency without converting makes a company look larger or smaller than the convention intends.
Compatibility
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Market cap uses the basic share count, which is the convention for the headline figure; the diluted count is reported separately and is what enterprise value uses, since the debt and cash are settled against the whole equity. The multiples use the basic cap for price-based ratios and enterprise value for the EV ones, which is how they are usually quoted.
The band boundaries are the common US dollar ones: under 50 million nano, 300 million micro, 2 billion small, 10 billion mid, 200 billion large, above that mega. Index providers differ, so they are labelled as a convention.
Impossible inputs are refused: a diluted count below the basic count, a float above 100 percent, negative debt or cash. Each indicates a figure in the wrong field rather than an unusual company.