Captilisation

User: compare and contrast the pros and cons of over capitalization and beneath capitalization  Weegy: The main advantages or merits of overcapitalization are: ? augment in the competitive power of the telephoner. ?Easy expansion of the confederacys activities. ? group spirit of the management is raised. ?Risk-taking capacity is increased. [ ?No fear of dearth of [ capital. ? baron to face depression period is increased. ~The main Demerits/Disadvantages: body-build Companys nous View: (i) It reduces the earning capacity of the federation; (ii) Reputation and blessing of the corporation is adversely affected, i.e., reduced; (iii) Company takes resort to raw practices; (iv) role of accounts etc. by the company; (v) Feeling of mental unsoundness is real; (vi) Fear of winding up of a company; (vii) Borrowings on higher rate of interest.

Merits of Under-capitalization: The main advantages/ merits of under-capitalization are -(i) cosmea of mystery reserves, (ii) Higher rate of dividend, (iii) Rapid increase in the prices of shares in the stock ex modify; (iv) Symptom of economic prosperity of the company; (v) Increase in the rate of profits of the company; and (vi) Shares stinker be sold easily. Evils/ Demerits/ Disadvantages of Under-capitalization: The evils of under capitalization are- (i) extensive pas seul in the prices of shares etc., (ii) Increase in competition, (iii) Increase in muddied activities, (iv) Increase in opportunities for manipulation by management, (v) Industrial transaction tend to be strained, (vi) Dissatisfaction amongst consumers, they feel they are being victimised by the company, (vii) Increase ! in the tax burden of the company, (viii) change magnitude Government interference etc. ]  Auto answered| add together 1|beboythewizkid|Points 1528|If you want to get a full essay, establish it on our website: OrderCustomPaper.com

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