Market Capitalization

The market capitalization is the total market value of the company. This can be calculated as:

Number of shares outstanding x current share price

On its own, the market capitalization may not have much of a significance, unless it is compared to figures in the balance sheet. For example, a company has a market capitalization of 100 million, no debt, 80 million of cash on its balance sheet and 10 million in average net income for the last 10 years. This company is thus considered undervalued because an investor who buys the entire company is paying 100 million – 80 = 20 million for 10 million of average annual income.

Read: Share Split

Minority Interest