Difference between capital structure and capitalisation
Answers
Explanation:
Capital Structure:
Framework of different types of financing employed by a firm to acquire resources necessary for its operations and growth. Commonly, it comprises of stockholders' investments (equity capital) and long-term loans (loan capital), but, unlike financial structure, does not include short-term loans (such as overdraft) and liabilities (such as trade credit). Also called capitalization structure.
Capitalization means and defined as:
1.Accounting: Recording of a cost as a fixed asset (written off as depreciation over several accounting periods) instead of an expense (charged off against earnings in one accounting period).
2.Corporate: Conversion of the retained earnings of a firm into capital through a new issue of stock.
3.Finance: Structure and amount of long-term equity and debt capitals of a firm expressed as percentage of the total (equity and debt) capital.
4.Leasing: Conversion of an operating lease into a capital lease by classifying the leased asset as a purchased asset, and showing the lease obligations as loan on the books of the lessee firm.
ᴄᴀᴘɪᴛᴀʟɪsᴀᴛɪᴏɴ ʀᴇғᴇʀs ᴛᴏ ᴛʜᴇ ᴛᴏᴛᴀʟ ᴀᴍᴏᴜɴᴛ ᴏғ sᴇᴄᴜʀɪᴛɪᴇs ɪssᴜᴇᴅ ʙʏ ᴀ ᴄᴏᴍᴘᴀɴʏ ᴡʜɪʟᴇ ᴄᴀᴘɪᴛᴀʟ sᴛʀᴜᴄᴛᴜʀᴇ ʀᴇғᴇʀs ᴛᴏ ᴛʜᴇ ᴋɪɴᴅs ᴏғ sᴇᴄᴜʀɪᴛɪᴇs ᴀɴᴅ ᴛʜᴇ ᴘʀᴏᴘᴏʀᴛɪᴏɴᴀᴛᴇ ᴀᴍᴏᴜɴᴛs ᴛʜᴀᴛ ᴍᴀᴋᴇ ᴜᴘ ᴄᴀᴘɪᴛᴀʟɪsᴀᴛɪᴏɴ