Quick Definition
Measures the rate of return of company stock.
Capitalization Rate Formula
Explanation of Capitalization Rate
The Capitalization Rate measures the rate of return on one share of company stock by comparing the
Earnings per Share to the price of one share of stock.
Importance of Capitalization Rate
A high, or increasing Capitalization Rate is usually a positive sign, showing that the company may be able to provide a healthier return for its stockholders. If there have been changes in the stock price, other reasons should be investigated as to why these changes occurred.
