Recent Examples of capitalization from the Web
For example, the children in the business may want to leave cash and profits in the company for expansion or greater capitalization.
The company said in its annual report its capitalization of those costs is limited, and so some of them are expensed as they are incurred.
The text of the proposal is littered with random capitalization, because some things are too important to lowercase.
The gamble paid off, giving the company a capitalization of $26.5 billion by the end of the day and making billions for the top five shareholders.
Produced by Tommy Mottola, The Dodgers, Tribeca Productions and Evamore Entertainment, A Bronx Tale's capitalization has been reported as $10 million.
Tippett’s meaning seems clear despite 18th century phrasing and abbreviations, not to mention capitalization that looks erratic to 20th century eyes.
And yes, the capitalization was part of the original report.
Smaller-capitalization stocks have outperformed larger ones this year.
These example sentences are selected automatically from various online news sources to reflect current usage of the word 'capitalization.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
Financial Definition of CAPITALIZATION
What It Is
In the business world, capitalization has two meanings. The first meaning, also called market capitalization, refers to the value of a company's outstanding shares. The formula for market capitalization is:
It is important to note that market cap is not the same as equity value, nor is it equal to a company's debt plus its shareholders' equity (although that too is sometimes referred to as simply the company's capitalization).
The second meaning of the term relates to the act of accounting for a cost as an asset instead of an expense.
How It Works
Let's assume Company XYZ has 10 million shares outstanding and the current share price is $9. Based on this information and the formula above, we can calculate that Company XYZ's market capitalization is 10 million x $9 = $90 million.
In the second use of the term, let’s assume Company XYZ creates a new drainage system to prevent run-off rainwater from flooding the neighbor’s business. Because the costs associated with the change constitute an addition to the property and allows it to use the property as a concert venue, Company XYZ can capitalize those costs. So, instead of recording the costs as an expense on the balance sheet, which would lower the company’s net income, Company XYZ records the costs as an asset on the balance sheet. These assets then depreciate, which has a much smaller effect on net profits.
Why It Matters
Capitalization reflects the theoretical value of a company, but this is usually not what the company could be purchased for in a normal merger transaction. One reason for this is that the value of material nonpublic information, management changes, operating synergies between the acquirer and the company, and other intangible factors may not be reflected in the stock price or the financial statements.
In the accounting sense, capitalization is good for companies that want to keep net income as high as possible; however, it’s not as good for companies that want to pay as little in taxes as possible (business expenses are tax-deductible; capitalized assets are not).
legal Definition of capitalization
- capitalization of earnings
- inadequate capitalization
Learn More about capitalization
Spanish Central: Translation of capitalization Nglish: Translation of capitalization for Spanish speakers
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