Calculation of Capitalization

This text provides an example of how to calculate the capitalization of a company. The capitalization of a company is the total amount of long-term debt and equity that the company has raised. It is a measure of the company’s financial strength and ability to repay its debts.

Questions

• What are the three sources of capitalization?
• How is capitalization calculated?
• What is the capitalization of the company in the example?

Answers

• The three sources of capitalization are equity share capital, preference share capital, and debentures.
• Capitalization is calculated by adding up the amount of equity share capital, preference share capital, and debentures.
• The capitalization of the company in the example is 61,000.