-A measure of a company's total value. It is estimated by determining the cost of buying an entire business in its current state.

Often referred to as "market cap", it is the total dollar value of all outstanding shares. It is calculated by multiplying the number of shares outstanding by the current market price of one share.

Brokerages vary on their exact definitions, but the current approximate classes of market capitalization are:

• Mega Cap: Market cap of $200 billion and greater
  
• Big/Large Cap: $10 billion to $200 billion
  
• Mid Cap: $2 billion to $10 billion
  
• Small Cap: $300 million to $2 billion
  
• Micro Cap: $50 million to $300 million
  
• Nano Cap: Under $50 million

There are no exact measurements for distinguishing small caps from large caps. For example, the Investment Company Institute (an association of investment companies) provides the following classes:

• Small Cap: Less than $1 billion
  
• Mid Cap: $1 billion to $5 billion
  
• Large Cap: Over $5 billion

 
If a business has 50 shares, each with a market value of $10, the business's market capitalization is $500 (50 shares x $10/ share).

Small Cap

-Refers to stocks with a relatively small market capitalization. The definition of small cap can vary among brokerages, but generally it is a company with a market capitalization of between $300 million and $2 billion.  

One of the biggest advantages of investing in small-cap stocks is the opportunity to beat institutional investors. Because mutual funds have restrictions that limit them from buying large portions of any one issuer's outstanding shares, some mutual funds would not be able to give the small cap a meaningful position in the fund. To overcome these limitations, the fund would usually have to file with the SEC, which means tipping its hand and inflating the previously attractive price.

Keep in mind that classifications such as "large cap" or "small cap" are only approximations that change over time. Also, the exact definition can vary between brokerage houses.

Large Cap

-Companies having a market capitalization between $10 billion and $200 billion. These are the big kahunas of the financial world. Examples include; Wal-Mart, Microsoft and General Electric. However, these stocks are sometimes called "mega caps".

Keep in mind that classifications such as "large cap" or "small cap" are only approximations that change over time. Also, the exact definition can vary between brokerage houses.

Total Enterprise Value (TEV)

-A valuation measurement used to compare companies with varying levels of debt. This is calculated as:

TEV = Market Capitalization + Interest Bearing Debt + Preferred Stock - Excess Cash.  

Some people only use market capitalization as the value of a company, but some companies issue more equity than others, so this is why we include debt.