Capitalization is a term with several meanings. But the process itself has as a result a single goal - increasing incomes. The concept of capitalization is applicable not only to a particular company, but also to the industry as a whole, and even to all enterprises of a particular state. And yet the term is divided into four separate values. First, capitalization is the transformation of all profit or part of it into additional capital or additional reasons-the means (objects) of labor, the increase in the number of employees, and so on. As a result, there is an increase in the mass of its own funds. In other words, capitalization implies calculated and deliberate actions related to the loss of the entire amount or part of it, which in the end allows you to get larger dividends than the available ones. Secondly, it is an assessment of the capitalization of an individual company. It is calculated on the basis of current and fixed assets. Thirdly, it is the calculation of the value of the enterprise, based on the profits that it receives annually.
Fourth, capitalization is the valuation of a firm, produced at the market value of its securities. This type implies the theory that the free market system is able to take into account in working order all the circumstances affecting the price of the enterprise as a whole - in the aggregate. That is, only in exchange trades and it is possible to find out the real value of the company. The calculation is quite simple: you need to multiply the exchange value of securities by their number. For example, the company issued 100 thousand shares, which at the time of trading on the exchange were at a price of 100 rubles. By simple multiplication, we get a figure of 10 million. It is this market capitalization of this company. Among domestic enterprises, Rosneft, Gazprom, LUKOIL, Sberbank and Norilsk Nickel are leaders in this respect.
In banking, capitalization is the addition to the capital of the current rate of interest on interest, the issuance of bonds, shares and other methods of increasing the financial base. For example, interest capitalization is a monthly or quarterly increase in the base amount with which dividends will be accrued in a subsequent period. Separately, the capitalization of the stock market. Here - it is an index of the scale of operations, or otherwise - the total market price of securities in circulation. There is still such a differentiation of this concept as direct capitalization. This is a way of transforming the annual income from an object directly into its value. That is, the price is no longer a mere denomination, but the sum of real and possible profits. The purpose of this process is to receive periodic income from the funds invested in real estate.
Capitalization is a real instrument that makes a profit. But it works effectively only if the data involved in its calculation are true. In order for the information to be correct, in every company that uses this tool in one form or another, there are structures that deal with this issue.