8/19/2019 What is Free Foat Market Capitalization Formula

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What is "free-oat market capitalization"?

 

Many dierent types of investors hold the shares of a company! The Govt. may hold

some of the shares. ome of the shares may e held y the fo#nders$ or

directors$ of the company. ome of the shares may e held y the %&'(s etc. etc!

)o*+ only the open market$ shares that are free for tradin, y anyone+ are called

the free-oat$ shares. When *e are calc#latin, the ense+ *e are interested in

these free-oat$ shares!

partic#lar company+ may have certain shares in the open market and certain

shares that are not availale for tradin, in the open market.

ccordin, the /0+ any shares that &1 )1T fall #nder the follo*in, criteria+ can e

considered to e open market shares2

3oldin,s y fo#nders4directors4 ac5#irers *hich has control element

3oldin,s y persons4 odies *ith "controllin, interest"

Government holdin, as promoter4ac5#irer

3oldin,s thro#,h the %&' 6o#te

trate,ic stakes y private corporate odies4 individ#als

05#ity held y associate4,ro#p companies 7cross-holdin,s8

05#ity held y employee *elfare tr#sts

9ocked-in shares and shares *hich *o#ld not e sold in the open market in normalco#rse.

company has to s#mit a complete report ao#t *ho has ho* many of the

company(s shares$ to the /0. 1n the asis of this+ the /0 *ill decide the free-

oat factor$ of the company. The free-oat factor$ is a very val#ale n#mer! 'f

yo# m#ltiply the "free-oat factor" *ith the market cap$ of that company+ yo# *ill

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,et the free-oat market cap$ *hich is the val#e of the shares of the company in

the open market!

simple *ay to #nderstand the free-oat market cap$ *o#ld e+ the total cost of

#yin, all the shares in the open market!

o+ havin, #nderstood *hat the free oat market cap$ is+ no* *hat? 3o* do yo#

:nd o#t the val#e of the ense at a partic#lar point? Well+ it(s pretty simple;.

%irst2 %ind o#t the free-oat market cap$ of all the =+=== @r... the ense val#e *ill e..

ense calc#lation!

o+ the ense val#e *ill e B=== if the free-oat market cap$ comes to

6s.>=+=== @r!

Clease )ote2 0very time one of the

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