Float-Adjusted Market Cap

What Is Float-Adjusted Market Capitalization?

Float-adjusted market cap is a measure of a company's current still up in the air by the total market value of all of its "free-floating" shares of stock. Floating shares are those that are accessible for public exchanging — this category does exclude non-adaptable outstanding shares that are restricted on the grounds that they are held by company insiders.
Frequently, companies issue stock options or awards as part of compensation plans, and keeping in mind that these shares may ultimately turn out to be part of the float, they are generally restricted and non-adaptable until they vest after some period of time.

How Is Float-Adjusted Market Cap Calculated?

To work out a company's float-adjusted market cap, essentially increase its current stock price by the number of floating shares it has outstanding. To track down the float, deduct any restricted shares from a company's total outstanding shares. This data can be found in the equity section of a company's balance sheet, which is recorded with the securities and exchange commission consistently.

Recipe

FAMC = Share Price * (Outstanding Shares - Restricted Shares)

or

FAMC = Share Price * Floating Shares Outstanding

Float-Adjusted versus Traditional Market Cap: What's the Difference?

Traditional market cap is likewise a measure of a company's current not entirely set in stone by stock price, however dissimilar to the float-adjusted rendition, it takes all outstanding shares — not just floating shares — into account in its calculation (MC = Share Price * Shares Outstanding). Thus, a company's traditional market cap is consistently equivalent to or higher than its float-adjusted market cap.
On the off chance that a company has no restricted shares outstanding, its float-adjusted market cap is equivalent to its traditional market cap. On the off chance that a company has any restricted shares outstanding, its traditional market cap is higher.

What Is Float-Adjusted Market Cap Used For?

Numerous stock indexes, including the S&P 500, use float-adjusted market cap rather than traditional market cap to decide how much weight every part company ought to have in the index's calculation. Thusly, such indexes keep away from overweighting companies that have a huge number of restricted shares outstanding that can't currently be bought or sold on the open market.

Which Major Stock Indexes Weigh Companies by Float-Adjusted Market Cap?

• S&P 500
• NYSE Composite
• MSCI World Index
• FTSE 100 Index