Market capitalization is a commonly used financial tool which reflects the value of a publicly traded company. It is calculated by multiplying the current market price of the company's stock by its total number of outstanding shares. It is a measure of the total value of the company in its market and is an important metric to consider when thinking about investing in that company.

Market 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.