A:

A company's market share is its sales measured as a percentage of an industry's total revenues. Determine a company's market share by dividing its total sales or revenues by the industry's total sales over a fiscal period. Use this measure to get a general idea of the size of a company relative to the industry.

To calculate a company's market share, first determine a period you want to examine. It can be a fiscal quarter, year or multiple years. Next, calculate the company's total sales over that period. Then, find out the total sales of the company's industry. Finally, divide the company's total revenue by its industry's total sales.

For example, suppose you want to calculate a toy manufacturer's market share over one fiscal year. The toy manufacturer had total revenues of $20 million, and the toy manufacturing industry had total revenues of $200 million over one fiscal year. To find the toy manufacturer's market share, divide $20 million by $200 million. The manufacturer's market share is 10%.

Market share can also be used to compare similar companies within the same overall industry. For example, suppose another toy manufacturing business has total revenues of $40 million. This toy manufacturer has a 20% market share of the industry. This signals that this toy manufacturer out-competes the toy manufacturer from the previous example.

It is also possible to use market share over multiple periods to see how well a company fares against its competitors and whether the company is growing.

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