Basically it refers to the value of a company’s outstanding shares.It is calculated as the product of current stock price and the shares outstanding.Say for example a company’s stock price on a given day is Rs 100,and it has 1000000 outstanding shares then the market capitalization of the company is Rs 100000000 or Rs 10 crores. The shares of a company that have been issued and are in the hands of the public are called outstanding stock,or shares outstanding. Market capitalization reflects the theoretical cost of buying all of a company’s shares, but usually is not what the company could be purchased for in a normal merger transaction.So its a better measure of size of a company than worth.

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