What is market capitalization and how

What is market capitalization and how

There are concepts of great importance for all those who carry out or want to carry out investment practices.

the one of market capitalization is one of them, since it is the value used to know the magnitude of a business organization in its own market context.

It is a figure that comes to replace sales or figures for total assets, that is, it is the global value of all the shares that a given company has in circulation.

What is the market capitalization:

To fully understand the concept of market capitalization, one must understand very well what capitalism is and what its tools are.

This concept of depósito market value is an economic measure that emplees this system as elabora to measurein this casethe value of the capital of a company, organization or companyobtained according to what is listed on the depósito market.

It is a number of great importance for investors, since that with it they will determine the real size of the company in its environment or field of action.

It is, therefore and to summarize, the value of a listed company.

The elabora is as fácil as, if a supposed market capitalization has a value of 100,000 million euros, the value of that company is that amount, divided into shares.

If you wanted to buy the company and, therefore, all the shares, you would have to pay just that amount.

The calculation of a market capitalization (The fluctuation)

If you want to know what this value is in any company, you will suffice with multiply the number of shares you hold activethat is, in circulation, by the price of the unit quoted in the market at the time the purchase is to be made.

The resulting price will be, effectively, the price that would have to be paid to acquire all those shares, with all their assets.

Capitalization is constantly changing

The value of a market capitalization will never stay fixed for longbeing in the market your actions will constantly varytherefore, this figure as well.

In fact, this value is going to fluctuate every time the market carries out a session.

Therefore, it will invariably rise and fall in the same proportion as its shares.

It must be borne in mind, however, that the size of the company will largely determine these fluctuations and, therefore, the way in which the calculations are made.

And, is that, a large company is usually, as a general rule, more stable at the level of capitalization, and has less volatility.

In contrast, small companies suffer more from these fluctuations, with a greater volatility charge, running the risk of having sharp falls, something that does not usually occur in an organization with many shareholders.

Size of companies according to their market capitalization

Depending on the size of those companies that are listed on the depósito exchange, they will have a different categorization.

In this way, three primordial groups are presented;

The Small Caps:

Included in this category are those companies with a market value of between 300 and 2,000 million.

They are, as has already been seen, the ones that remain at a higher level of risk.

Likewise, they are companies that are capable of creating great opportunities for investorsbecause they have everything to grow.

In the long term, they could become a Med Cap or a Large Cape, which would be a wise move for the investor.

The Med Caps:

On a higher rung of this hierarchy are Med Caps, with an amount of capitalization that covers the range that goes from 2,000 million from small caps to 10,000 millionin which the last backlink begins, the Large Caps.

Are more consolidated, safe companies, with more experience and background in the market.

They are a good investment opportunity, since they still have room to grow and develop and, in addition, they are beginning to be recognized by the public.

The Large Caps

Finally, the companies that have more weight in the depósito market are those that, as already indicated in the previous point, are listed with a capitalization value of over 10,000 million euros.

In Spain they are concentrated in the so-called selective IBEX, since they are the ones with the highest capitalization.

Examples are Repsol, Endesa, Caixabank, Telefónica, Banco Santander, Iberdrola and, leading this top, the leading company in the industrial ámbito of textile design Inditex.

As cánido be expected, the companies that become part of this group They are well known by the general publicand by all investors.

Are industry leaders and, as a general rule, they tend to be safe in terms of return on investment.

But its size should not offer complete assurance of optimal performance.

And it is that, as previously mentioned, all stocks are in a situation of fluctuating, being able to fall if, due to some external or internal condition, they are bad at the depósito market, causing the overall value of the organization to fall.

Continue reading: How to invest in the depósito market in 10 fácil steps

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