Capitalization Of Profits

Same as the Capitalization of Earnings...only with profits rather than earnings. Minor tweak.

Same process and rationale if you said, “hey, I’m going to invest in myself and start learning things!” then you’ve essentially capitalized your profits of time and money (on a personal level). In general, “to capitalize” something is to turn it into capital. Go figure.

In the usual sense, the capitalization of profits is when a company takes some of its profits, converting them into capital stock. They can issue bonus shares to shareholders, or even make stock dividends. How far can they go? Only as far as the size of their existing stockholder group. Capitalizing profits is instant gratification for shareholders, but it’s also a form of putting money into a savings account for the company. Win-win.