Public Company

The phrase "public company" as used in the United States refers to a company that is owned by members of the general public called stockholders. These individuals may purchase and sell shares in the company, which will be listed on a stock exchange.

Public companies have a greater ability to raise capital and funds through the sale of stock. Private companies, on the other hand, are not compelled by force of law to disclose as much, if any, financial information such as the Form 10-K "annual report" required of public companies by the Securities and Exchange Commission.

The size, or value, of a public company is determined by taking the number of available shares and multiplying that figure by the per share price to arrive at the company's market capitalization or "market cap." Companies are further evaluated according to their degree of market capitalization relative to other traded entities so that the terms large cap, mid cap, and small cap are all in common usage.

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