Capitalization Ratios

Capitalization Ratios - The capitalization ratios is the percentage of the company or corporation's total capitalization each company or corporation's capital component contributes to the company whether it be debt, preferred stock, other equity, or common stock. This is a ratio is calculated by taking the net operating income produced by combining all assets, and dividing it by its capital costs, which is the original price paid to purchase the assets also known as the current market value. Capitalization rates are an indirect way to measure how quickly an investment will pay for itself.