How is an ERC calculated?

Could you kindly explain how an ERC is calculated? I've been hearing about it quite frequently in the cryptocurrency circles, but I'm still not entirely sure about the intricacies involved. Is it based on a complex algorithm? Or does it have something to do with the market capitalization of a particular coin? It would be really helpful if you could break it down for me in a simple yet informative manner. After all, understanding the ERC calculation could aid in making better investment decisions, don't you think? I'm eager to learn more about this topic and your insights would be greatly appreciated.