{"id":4065,"date":"2023-03-20T23:18:14","date_gmt":"2023-03-20T23:18:14","guid":{"rendered":"https:\/\/fisdomdevel.wpengine.com\/glossary\/free-float\/"},"modified":"2023-05-01T15:54:46","modified_gmt":"2023-05-01T15:54:46","slug":"free-float","status":"publish","type":"post","link":"https:\/\/www.fisdom.com\/glossary\/free-float\/","title":{"rendered":"Free Float"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Free Float denotes the market capitalization of a company where shares held by promoters, directors, trusts, government etc are not considered for its market-cap calculation.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-free-float-explained\">Free Float Explained<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Generally, the market capitalisation or M-Cap of a company is calculated by multiplying the number of outstanding shares by its price. So, the market-cap of a company with 1,00,000 outstanding shares @ INR 50 will be INR 50,00,000.This is also the basis of calculation for categorizing companies into Large, Mid and small caps.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><br><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, under the Free Float mechanism, only the publicly held shares are taken into account for arriving at the market cap. Free Float method also means that the M-Cap will be lower than the consolidated market-cap otherwise calculated.<br>Traders watch this factor closely as the actual market capitalisation does not give a true picture of a company\u2019s shares available for trading.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-importance-of-free-float\">Importance of Free Float<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Importance of Free Float can be explained as:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">1. It is considered as the true and accurate measure of market capitalisation because only actively available and traded shares are considered.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">2. Companies with substantial free float are generally considered better managed and transparent, as otherwise, few big shareholders would have some power to impact share price meaningfully.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">3. More and more companies and stock exchanges are preferring this methodology of Market Capitalisation calculation.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-\">&nbsp;<\/h2>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h--1\">&nbsp;<\/h2>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h--2\">&nbsp;<\/h2>\n","protected":false},"excerpt":{"rendered":"<p>Free Float denotes the market capitalization of a company where shares held by promoters, directors, trusts, government etc are not considered for its market-cap calculation. Free Float Explained Generally, the market capitalisation or M-Cap of a company is calculated by multiplying the number of outstanding shares by its price. So, the market-cap of a company [&hellip;]<\/p>\n","protected":false},"author":67,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[11],"tags":[],"class_list":["post-4065","post","type-post","status-publish","format-standard","hentry","category-stocks"],"_links":{"self":[{"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/posts\/4065","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/users\/67"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/comments?post=4065"}],"version-history":[{"count":0,"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/posts\/4065\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/media?parent=4065"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/categories?post=4065"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/tags?post=4065"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}