What does the term "market capitalization" refer to?

Market capitalization refers specifically to the total market value of a company's outstanding shares. It is calculated by multiplying the current stock price by the total number of shares that are available for trading in the market. This metric is an essential indicator of a company's size and can be used to assess its overall financial health compared to other companies.

Understanding market capitalization is crucial for investors because it helps them gauge the relative size of companies in the stock market, categorize companies into different sectors (such as large-cap, mid-cap, and small-cap), and make informed investment decisions. In contrast, the other choices relate to different financial metrics: total revenue measures a company's sales, the number of shares provides a measure of ownership distribution, and total assets indicate what the company owns rather than its market value. This perspective on market capitalization plays a key role in evaluating investment opportunities.