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What does "Outstanding Capitalization" mean? For a start-up, if 7.5M shares are issued and 10M shares are authorized, does outstanding capitalization mean 10M shares or 7.5M shares?

Thanks in advance.

UPDATE: I do mean "outstanding capitalization." In our offer letters, it reads "You will be issued stock options to purchase x% of ACME's equity, based on the outstanding capitalization as of the date of your first day of employment." So that's why I'm wondering what outstanding capitalization means because our shares are calculated based on it.

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I think you may mean Outstanding Shares or Capital Stock Outstanding.

In either case, if you want to find the market capitalization of a company, you need to know the total number of shares owned by investors (Outstanding Shares) and then multiply that by the price per share.

Another complexity comes into play when you talk about the Fully Diluted Price or Value. Full diluted means you take what is issued and what could be issued in the total outstanding shares number.

For your example, assuming you are trying to figure out the market capitalization, the number you would use would be 7.5M. If you wanted fully diluted, then it would be 7.5M + 10M (if the 10M is in addition to the 7.5M).

Doing some additional research, it looks like Outstanding Capitalization is the same as fully-diluted number of shares. The only reference I found was here. It's an old document from General Motors where it defines Outstanding Capitalization about mid way down the page.

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Jarie, actually I do mean "outstanding capitalization." In our offer letters, it reads "You will be issued stock options to purchase x% of ACME's equity, based on the outstanding capitalization as of the date of your first day of employment." So that's why I'm wondering what outstanding capitalization means because our shares are calculated based on it. – Bobby Claire Feb 22 '10 at 16:31
Interesting. It looks like that would be the total amount of stock, including common, preferred, options and debentures (warrants). So that would be the fully-diluted number of shares when you started. It's actually an olderish term. I will update my answer to reflect that. – Jarie Bolander Feb 22 '10 at 16:47
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I'm not sure what you mean by "outstanding capitalization". I think perhaps you mean "market capitalization".

This is the total value of the enterprise and is determined by multiplying the # of shares issued times the current price of the stock.

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Your clarifications are helpful - thanks. It does suggest that they are taking a fully diluted view. I'd suggest getting a clarification in writing from "ACME". – Warren E. Hart Feb 22 '10 at 17:27

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