Recent Examples of capitalization from the Web
With a larger market capitalization than SCANA, Southern appears willing to take on more risk in building the project.
At $15 apiece, the company’s total of 79.5 million shares outstanding translates to a market capitalization of nearly $1.2 billion.
The sweet spot for research sponsored by companies is those with a market capitalization of under $300 million and which have one or no analysts covering them, Sidoti, the founder and CEO of the firm, said in an interview in New York.
Hastings told investors not to worry, noting that Netflix's ratio of debt to its market capitalization (which is rapidly approaching $80 billion) is low enough to allay any concerns.
Apple, the world's largest company by market capitalization, paid a tax rate of just 0.005% in 2014.
Having almost quadrupled its market capitalization to $13.2 billion between February 2016 and June 2017, the ETF offered investors enough room to sell quickly.
Now, Apple and Alphabet (Google’s parent company) have become the two most valuable companies, with a combined market capitalization of over $1.3 trillion.
Market capitalization is an estimation of a company's value calculated by multiplying the number of outstanding shares by stock price.
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.
First Known Use of capitalization
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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