capitalization,n.1. The act or process of capitalizing or converting something into capital. 2. The amount or sum resulting from this act or process. 3. The total amount of long-term financing used by a business, including stocks, bonds, retained earnings, and other funds. 4. The total par value or stated value of the authorized or outstanding stock of a corporation.thin capitalization.The financial condition of a firm that has a high ratio of liabilities to capital. undercapitalization. The financial condition of a firm that does not have enough capital to carry on its business. [Cases: Corporations  1.4(1). C.J.S. Corporations §§ 9, 13.] [Blacks Law 8th]