The capitalization rate can be used to determine the riskiness of an investment opportunity – a high capitalization rate implies lower risk while a low capitalization rate implies higher risk. This represents the total value the market has placed on the value of a company’s common stock. The market capitalization calculation is an important and useful stock valuation formula for investment analysis. It is an estimate of the total value of a company. In other words, it calculates the financial leverage of the company by comparing the total debt with total equity or a section of equity.

Market capitalization (a.k.a. Some examples would be Apple, Microsoft, IBM, Facebook, etc. it reflects how much it would cost to purchase the entire company at the current share value. Market Capitalization Sample Calculation Market Capitalization Categories. The most common capitalization ratios are:. Capitalization Rate = Net Operating Income / Current Market Value of the property Capitalization Rate can be defined as the rate of return for an investor, investing money in real estate properties, based on the Net Operating Income that the property generates. Market Capitalization (Market Cap) Market capitalization, or market cap, is the combined value of all of a company’s outstanding stock. The formula for the capitalization rate is calculated as net operating income divided by the current market value of the asset.

the market capitalisation of a company is the value of it, based on the total value of all its outstanding shares. Its measurement is by multiplication of stock price with outstanding shares. market cap) is the total market value of all the company’s outstanding equity shares. Market value is a great measure to value the companies if the price to earnings ratio of the two companies is the same. Market Capitalization also called as Market Cap, means the market value of the company’s outstanding shares. Market Capitalization Formula. The capitalization ratio, often called the Cap ratio, is a financial metric that measures a company’s solvency by calculating the total debt component of the company’s capital structure of the balance sheet.

Formula: Market Capitalization = Outstanding Shares * Stock Price. Explanation of Capitalization Rate Formula. market cap is calculated using the following formula: outstanding shares x share price. The market value of a company's equity is the total value given by the investment community to a business. Broadly speaking, based on market capitalization, the stock market classifies stocks into various categories: Large Cap – Companies with a market cap above $10 billion are classified as large-cap stocks.