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Definition of 'Capitalization'

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Capitalization is the process of raising money by issuing shares of stock. It is also the total value of a company's assets, minus its liabilities.

There are two main types of capitalization: debt and equity. Debt capitalization is when a company borrows money from lenders, such as banks or bondholders. Equity capitalization is when a company sells shares of stock to investors.

The amount of debt and equity a company has is important because it affects its financial health. A company with too much debt may be at risk of default, while a company with too little equity may not have enough money to fund its operations.

There are a number of factors that companies consider when deciding how to raise capital. These factors include the cost of debt and equity, the company's financial health, and its growth prospects.

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Capitalization is also used to refer to the total value of a company's assets, minus its liabilities. This is also known as the company's net worth.

The capitalization of a company can be used to compare it to other companies in the same industry. It can also be used to track the company's financial health over time.

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Capitalization is an important concept for understanding how businesses finance their operations. By understanding the different types of capitalization and how they affect a company's financial health, investors can make more informed decisions about where to invest their money.

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