Capitalisation is an important constituent of the financial plan of a business. In common parlance, the term 'capitalisation' refers to the total amount of capital employed in a business. In its broad sense, the term 'capitalisation' refers to the process of determining the quantum and patterns of financing. It includes the determination of not only the total quantity of capital [...]
The terms, capitalization, capital structure and financial structure, do not mean the same. While capitalisation is a quantitative aspect of the financial planning of an enterprise, capital structure is concerned with the qualitative aspect. Capitalisation refers to the total amount of securities issued by a company while capital structure refers to the kinds of securities and the proportionate amounts that [...]
This article throws light upon the ten main reasons necessitating change in capitalisation. The reasons are: 1. To Restore Balance in the Financial Plan 2. To Simplify the Capital Structure 3. To Suit Investor's Needs 4. To fund Current Liabilities 5. To Write off the Deficit 6. To Capitalize Retained Earnings 7. To Clear Default on Fixed Cost Securities 8. [...]