Capitalization change

Capitalization change refers to a modification of a company's capital structure — the percentage of debt and equity used to finance operations and growth. 

Debt includes bond issues or loans, while equity mainly consists of common stock, preferred stock, and retained earnings.

The capital structure in a firm is generally expressed as debt to equity or debt to capital ratio.  The total amount of debt or equity employed by a firm to fund the operations and finance the assets in a business. 

To fund the business’s operations, acquisition, and other investments, organizations use debt and equity capital. Companies need to look at tradeoffs and then decide whether they need to use the debit or equity to finance the operations. The managers balance the two to check the optimal capital structure.