Capitalization definition explanation

What is 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”". Read more for examples and further explanation including related video clips and also comments

Example explains 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.

[tubepress mode='tag', tagValue='Capitalization invest']