Meaning of Capitalisation... Need of Capitalisation
The capital structure or the capitalisation of an undertaking refers to the way in which it's long term obligations are distributed between different classes of owners and creditors. It is a plan of a company finance by which it seeks to determine the amount of capital necessary for company promotion and management and to utilize the needed fund in different sources from which it is to be raised. The concept of Capitalisation means the process building up a capital structure and tapping the sources to mobilize the capital in the form of shares, bonds loans or reserves etc. Hence capitalisation include two aspects: (a) Formation of capital structure. (b) Determination of the sources of capital supply. It involves one of the most difficult task on the part of promoters,since the estimate of capital requirement is dependent on certain factors unforcing contingent of a concern. The term Capitalisation is used only in relation to compani