Glossary

With over 200 terms in both English and French, our M&A Dictionary is designed to help you better understand the key words and concepts related to the sale oe purchase of a business in Canada.

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Capitalization

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Category: Accounting and Finance

Definition:

In the context of finance, capitalization typically refers to two related but distinct concepts: market capitalization and capitalization in accounting. Market Capitalization (Market Cap) is the total value of a company’s outstanding shares of stock. It is calculated by multiplying the current market price per share by the total number of outstanding shares. Market capitalization is often used to categorize companies into different size classes, such as large-cap, mid-cap, and small-cap. Capitalization in Accounting refers to the recording of an expenditure as an asset on the balance sheet instead of recognizing it as an expense on the income statement. This is done when the expenditure is expected to provide future benefits. For example, the cost of acquiring or improving a long-term asset, such as property, plant, or equipment, might be capitalized.