## Market Capitalisation: A Key Indicator of Company Value
When it comes to evaluating the worth of a company, market capitalisation is a crucial factor to consider. It represents the total value of a company’s outstanding shares of stock, calculated by multiplying the current market price per share by the total number of shares. Market capitalisation helps investors and analysts gauge the size and performance of a company in the market.
### Key Factors Affecting Market Capitalisation
Several factors influence a company’s market capitalisation, including:
1. Net Sales: The total revenue generated by a company from its core operations.
2. Net Profit: The amount of money left after deducting all expenses from the net sales.
3. Total Assets: The sum of a company’s current and non-current assets, representing its overall financial strength.
4. Excise: The tax levied on the production or sale of specific goods.
5. Other Income: Additional revenue sources apart from the core operations.
6. Raw Materials: The primary materials used in the production process.
7. Power & Fuel: The energy sources required for manufacturing and operations.
8. Employee Cost: The expenses associated with employee salaries, benefits, and other related costs.
9. PBDIT (Profit Before Depreciation, Interest, and Tax): The company’s operating profit before accounting for depreciation, interest, and taxes.
10. Interest: The cost of borrowing funds for the company’s operations.
11. Tax: The amount of tax paid by the company on its profits.
12. EPS (Earnings Per Share): The portion of a company’s profit allocated to each outstanding share of common stock.
13. Investments: The capital allocated by the company for acquiring other businesses or assets.
14. Sundry Debtors: The money owed to the company by its customers.
15. Cash/Bank: The amount of cash and bank balance held by the company.
16. Inventory: The value of goods held by the company for production or sale.
17. Debt: The total amount of money borrowed by the company.
18. Contingent Liabilities: Potential obligations that may arise in the future, depending on the outcome of uncertain events.
### Market Capitalisation Across Various Industries
Market capitalisation varies across different industries. Here are some examples:
2. Aerospace & Defence
4. Air Conditioners
6. Aluminium & Aluminium Products
7. Amusement Parks/Recreation/Club
9. Auto Ancillaries – Air Conditioning Parts
10. Auto Ancillaries – Auto, Truck & Motorcycle Parts
Market capitalisation is a critical metric for investors and analysts to assess the value and performance of a company. By considering various factors such as net sales, net profit, total assets, and more, market capitalisation provides valuable insights into a company’s financial standing and market position.