DEFINITION of 'Capitalization'

1. In accounting, it is where costs to acquire an asset are included in the price of the asset.

2. The sum of a corporation's stock, long-term debt and retained earnings. Also known as "invested capital".

3. A company's outstanding shares multiplied by its share price, better known as "market capitalization".


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BREAKING DOWN 'Capitalization'

1. For example, if a machine has a price of $1 million this value would be recorded in the assets, if there was also a $20,000 charge for shipping the machine then this cost would be capitalized and included in assets.

2. The capitalization of a firm can be overcapitalized and undercapitalized, both of which are potential negatives.

3. If a company has 1,000,000 shares and is currently trading at $10 a share, their market capitalization is $10,000,000.

  1. Long-Term Debt

    Long-term debt consists of loans and financial obligations lasting ...
  2. Outstanding Shares

    A company's stock currently held by all its shareholders, including ...
  3. Capitalization Of Profits

    Converting a company's retained earnings, which represent the ...
  4. Reconstitution

    A reevaluation of a market index that involves adding and removing ...
  5. Commodity Credit Corporation - ...

    An agency of the U.S. Department of Agriculture. The Commodity ...
  6. Market Capitalization

    The total dollar market value of all of a company's outstanding ...
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