business law

Capitalization

1) In the accounting context, it is where a cost is recorded as a a price of the asset rather than as an expenditure.

2) In the corporate context, it is a firm's "invested capital," meaning the business' corporate stock plus long-term debt plus retained earnings.

3) The total dollar value of a company's outstanding shares - better known as market capitalization.  It is calculated by multiplying the total number of outstanding shares by the market value of one share.

Capital Expenditure

Known as CAPEX, capital expenditures describe funds used by a business to upgrade or acquire new physical assets, such as tools and other equipment, for the purpose of attaining future benefits.  In the accounting context, capital expenditures are listed to an asset account.

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