Market Capitalization
Candlefocus EditorMarket capitalization provides insight into the size of a company and its performance. Companies are usually classified according to their size by classifying them as Large-Cap ($10 billion or more), Mid-Cap ($2 billion to $10 billion), or Small-Cap ($300 million to $2 billion). Generally speaking, businesses with larger market capitalization are seen as having more stable investments as these more established companies usually provide an investment with more security.
When evaluating a company’s market capitalization, it is important to consider other factors such as the company’s balance sheet, sustainable competitive advantage and other financial ratios. Market capitalization alone does not provide a complete assessment of the financial health of a company, but it can act as one of the first steps to determine the health of a company. Since market capitalization is a reflection of a company's performance, it can indicate areas of strength and weakness in a company.
In conclusion, Market capitalization is an important metric used to measure the current size and potential success of a company. By taking into account the company’s market cap and other financial factors such as balance sheet, competitive advantage and financial ratios, investors can make informed decisions when choosing to invest in a particular company.