How is market capitalization defined?

Market capitalization is defined as the total market value of a company's outstanding shares of stock. It represents what the market believes a company is worth at any given time, based on the stock price and the number of shares that are currently outstanding. To calculate market capitalization, you multiply the current share price by the total number of outstanding shares. This figure is a crucial metric for investors, as it provides a quick way to gauge the size and value of a company compared to others in the market.

Total liabilities, total equity, and total revenue each measure different aspects of a company's financial health but do not directly indicate its market value in the way market capitalization does. Total liabilities refer to what a company owes, total equity reflects the shareholders' ownership interest, and total revenue indicates the income generated from sales but doesn't encompass the entirety of a company's value in terms of investments and market perception. Thus, the definition that captures the essence of a company's market value is the total market value of outstanding shares.