Market Capitalization --- it is the worth of the company in terms of shares...
Mathematically,
Market Capitalization = No. of outstanding shares x Current market price of one share
Here outstanding shares includes restricted shares owned by the company's officers and insiders, as well as those held by the public.
For eg. Consider a company called XYZ which issues 500 outstanding shares and each share costs Rs.100 then Full Market capitalization of the company is 500 x 100 = Rs.50000
Based on this market capitalization values only companies are classified into "large-cap", "mid-cap" and "small cap" ....
Mathematically,
Market Capitalization = No. of outstanding shares x Current market price of one share
Here outstanding shares includes restricted shares owned by the company's officers and insiders, as well as those held by the public.
For eg. Consider a company called XYZ which issues 500 outstanding shares and each share costs Rs.100 then Full Market capitalization of the company is 500 x 100 = Rs.50000
Based on this market capitalization values only companies are classified into "large-cap", "mid-cap" and "small cap" ....
Free float shares --- The shares that are free for trading by anyone, are called the “free-float” shares
[ because there are shares that can be held by the founder or the government or sometimes it involves even FDI(Foreign direct investment) and not subjected in open market...]
Consider the XYZ company has 150 shares owned by its founder and 50 shares owned by the govt. then no. of free float shares = 500 - 150 - 50 = 300.
Free float factor --- it is normally issued by the corresponding stock exchanges depending on how many shares belong to whom...
Free float factor of company XYZ is 300/500 = 0.6
[Free-float factor of say 0.6 means that only 60% of the market capitalization of the company will be considered for index calculation... ]
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