So why is m-cap of pristine importance and who are the winners?

That is, increase or decrease in share price of a company can be an indicator of the company’s performance; as the same is affected by many external factors like issue of bonus shares, right shares, share splits, share consolidations, and of course the present value of future cash flows to the corporation. The market cap of a company – that is computed by multiplying the market price per share of a company with the total number of shares – should technically remain unaltered in all the aforementioned cases (except due to factual performance changes in the corporation) as the fluctuations in share prices get adjusted automatically due to the proportionate changes in the total number of shares.

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Source:- IIPM Editorial

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