I have read if market cap of company A is more than company B then total monetary value of company A is more than company B. Is it TRUE? I don't think so because if company A has 90% outstanding while company B has only 10% outstanding shares. Am I getting it correctly?
1 Answer
Is it TRUE?
You can answer that easily if you look up the definition of market cap. It is last trade price * number of shares outstanding (i.e. issued).
I don't think so because if company A has 90% outstanding while company B has only 10% outstanding shares. Am I getting it correctly?
No. Percentage outstanding is absolutely irrelevant because the formula only takes the shares in investor hands into account. It is irrelevant how many more shares the company CAN offer - they are simply not part of the calculation.
