How is market capitalization calculated?

Market capitalization is a measure of a company's total market value as determined by the stock market. It is calculated by multiplying the current share price of the company's stock by the total number of outstanding shares. This formula reflects the market's perception of the company's future growth potential and overall value.

In this context, the correct answer effectively demonstrates the relationship between share price and the number of shares, which together provide a clear representation of the company’s total value in the eyes of investors. When investors assess a company's performance and potential, they often look at market capitalization as a key indicator of size and stability compared to other companies.

The other options do not accurately represent how market capitalization is determined. For example, dividing total assets by total liabilities relates to financial ratios such as leverage or liquidity but does not provide a market valuation. Adding share price to the total number of outstanding shares is mathematically incorrect and does not produce a meaningful financial metric. Lastly, using total revenue divided by total shares forecasted fails to capture market perception and is not a standard method for calculating market capitalization. Thus, the mathematical relationship in the correct answer is essential for accurately interpreting a company's market value.