How is market capitalization defined?

Market capitalization is defined as the total market value of a company's outstanding shares. This metric is calculated by multiplying the current share price by the total number of outstanding shares, providing a clear representation of the company's size and value within the market. It serves as an important indicator for investors, helping them to evaluate the relative size of companies and make informed investment decisions.

Since market capitalization reflects the market's perception of a company’s worth, it acts as a useful benchmark for comparing companies within the same industry. It also has implications for investors in terms of risk and return profiles since companies with higher market caps may be seen as more stable investments compared to smaller firms.

The other options presented do not accurately define market capitalization. Total assets minus total liabilities refers to a company's equity or book value, annual revenue pertains to a company's sales performance over a period, and net income after taxes reflects the company's profitability, none of which capture the concept of market capitalization.