Wednesday, July 13, 2011

What is Capitalization?


A company's capitalization refers to the total Naira market value of all of a company's outstanding shares. Capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determining a company's size, as opposed to sales or total asset figures.

Capitalization Explained
If a company has 35 million shares outstanding,

each with a market value of N100, the company's market capitalization is N3.5 billion (35,000,000 x N100 per share).

Company size is a basic determinant of asset allocation and risk-return parameters for stocks and stock mutual funds. The term should not be confused with a company's "capitalization," which is a financial statement term that refers to the sum of a company's shareholders' equity plus long-term debt.

A premium profile on www.broadstreetlagos.com gives you access to the data you need. Over the next few weeks we will discuss more phrases.

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  6. Capitalize is a term often heard in the financial market. It is the term used to describe the method of delaying the recognition of the expenses. This is done by recording the expenses in the form of assets that are long term.
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