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The debt and/or equity mix that funds a firm's assets.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Market Capitalization

The total value of all outstanding shares of a publicly-traded company. The market capitalization is calculated by multiplying the shares outstanding by the price per share. Market capitalization is one of the basic measures of a publicly-traded company; it is a way of determining the rough value of a company. Generally speaking, a higher market capitalization indicates a more valuable company. Many exchanges and indices are weighted for market capitalization. It is informally known as market cap. See also: Large cap, Mid cap, Small cap.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


The amounts and types of long-term financing used by a firm. Types of financing include common stock, preferred stock, retained earnings, and long-term debt. A firm with capitalization including little or no long-term debt is considered to be financed very conservatively. Also called cap, capital structure, financial structure, total capitalization. See also complex capital structure, large-cap, market capitalization, recapitalization, small-cap.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
Although this date is earlier (and thus requires the capitalization of more transaction costs) than that applicable to "covered transactions" under Treas.
Specifically, the new rules require the capitalization of transaction costs relating only to the following ten types of transactions: (i) an acquisition of as sets constituting a trade or business; (ii) the taxpayer's acquisition of an ownership interest in a business entity if the two are related immediately thereafter; (iii) another party's acquisition of an ownership interest in the taxpayer; (iv) a restructuring, recapitalization, or reorganization of the capital structure of a business entity (including reorganizations described in section 368 and section 355 transactions); (v) a section 351 or section 721 transaction; (vi) the formation or organization of a disregarded entity; (vii) an acquisition of capital; (viii) a stock issuance; (ix) a borrowing; or (x) writing an option.
The "covered transactions" rule appears to be a compromise approach, identifying a bright-line date later than that favored by many revenue agents under the whether-and-which standard yet requiring the capitalization of "inherently facilitative" costs whenever they are incurred.
(38) The regulations implement this resolve by essentially removing all discretion from everyone within the IRS and Treasury other than the senior-most leadership (those that have final approval of all regulations and revenue rulings) in identifying "significant future benefits" requiring capitalization. The structure of the regulations themselves--providing lists and examples rather than principles and general rules--also suggests a determination to prevent unintended or overly creative interpretations of the regulations by simply minimizing the number of rules available to be interpreted.
Perhaps most telling of this resolve (or exasperation, again depending on your perspective), is the government's reversal of the notion that "capitalization is the norm," with deductibility--at least in the context of created intangibles--now being the default rule.
As much as we would all like to believe that this regulation will put an end to controversy in this area, our collective experiences in dealing with capitalization issues suggests this may be overly optimistic.
Notice 2004-18 suggests that this guidance is under development, but given that the capitalization requirement is already in place, the need for amortization guidance is immediate.
(41) A cost not capitalized under the INDOPCO regulations still may be subject to capitalization under section 263A.
On balance, although neither the government nor taxpayers should view the new INDOPCO regulations as the end of the capitalization story, the changes should go a long way to resolving a wide range of expensive, time-consuming controversies and as such are a welcome addition to the tax accounting landscape.
[section] 1.263A-10 (using a "functional interdependence" test to define a unit of property for purposes of the interest capitalization rules).
99-23 addresses only the applicability of section 195 to costs incurred in connection with a new trade or business unrelated to the taxpayer's existing business, many read the ruling as establishing a general capitalization principle distinguishing between deductible investigatory costs and capitalizable acquisition costs.