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How to Calculate the Net Market Value of Common Equity

Original post by Eric Feigenbaum of Demand Media

Market capitalization is the number of shares multiplied by the current share price.

Net market value of common equity is another term for the market capitalization of a common stock. Market capitalization is the total value of a company's common shares on the open market. Investors care about market capitalization because it's an indicator of a company's strength and size. A corporation with market capitalization of over $200 billion is considered a mega cap stock, often known as a blue chip -- meaning it's considered one of the world's top companies and in general presents less risk than a small-cap stock.

Contents

Step 1

Look up the current trading price of a company whose market capitalization you want to determine. Because market capitalization changes constantly, a live source of information such as a website that gets real-time price quotes will improve accuracy.

Step 2

Check the number of outstanding common shares of stock your target company has issued. You can find this on most online stock price websites, in newspaper stock listing, from a stock guide such as Standard & Poor's or Moody's.

Step 3

Multiply the stock price by the number of outstanding shares. The result is your stock's market capitalization. For example, a company selling at $25 a share with 100,000 shares outstanding has a market capitalization of $2.5 million -- which classifies it as a so-called nano cap stock as it has a market capitalization of less than $50 million.


                   

References

About the Author

Eric Feigenbaum started his career in print journalism, becoming editor-in-chief of "The Daily" of the University of Washington during college and afterward working at two major newspapers. He later did many print and Web projects including re-brandings for major companies and catalog production.

Photo Credits

  • Creatas/Creatas/Getty Images


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