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Meaning And Definition Of Capitalization


Capitalization is one of the most important parts of financial decision, which is related to the total amount of capital employed in the business concern. Understanding the concept of capitalization leads to solve many problems in the field of financial management. Because there is a confusion among the capital, capitalization and capital structure.

Meaning of Capitalization:

Capitalization refers to the process of determining the quantum of funds that a firm needs to run its business. Capitalization is only the par value of share capital and debenture and it does not include reserve and surplus.

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Definition of Capitalization:

Capitalization can be defined by the various financial management experts. Some of the definitions are mentioned below:

According to Guthman and Dougall, “capitalization is the sum of the par value of stocks and bonds outstanding”.

“Capitalization is the balance sheet value of stocks and bonds outstands”. — Bonneville and Dewey

According to Arhur. S. Dewing, “capitalization is the sum total of the par value of all shares”.

About Author Mohamed Abu 'l-Gharaniq

when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries.

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