What Is an Aggregate Market Value?

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The aggregate market value of a corporation is often used to measure the size of the company. The term market capitalization, or market cap, is also frequently used to describe the same measurement. The aggregate market value of a company essentially measures the total value of all outstanding shares of equity, according to the market's evaluation.

Market Value

  • The market value of a stock, as the name suggests, is the value of a stock according to a particular market for that type of investment. The price is driven by supply and demand, so the more demand there is for the stock of a particular company, the greater the market value of that stock.

Aggregate Market Value

  • The aggregate market value of a company is simply the combined market value of all of its outstanding stock. For example, a company with 100 million shares of stock outstanding that is currently trading at $30 per share would have an aggregate market value of $3 billion, which is equal to $30 per share multiplied by 100 million shares.

Stock Exchange Listings

  • Most of the major stock market exchanges want the companies listed on their exchange to be of a certain size. For this reason, they will often place lower limits on the aggregate market value of these companies. Companies that don't meet these limits may have to meet other qualifications or face delisting.

Debt-to-Equity Ratio

  • The aggregate market value of a company is an important component of the debt-to-equity ratio, which measures the relative contributions of debt and equity to a corporation's finances. The ratio is calculated by dividing the total debt of the company by the aggregate market value of its equity. Generally, the higher the ratio, the riskier the company may seem to potential investors.

References

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