Captilisation

User: compare and contrast the pros and cons of over capitalization and infra capitalization  Weegy: The main advantages or merits of overcapitalization are: ? get through in the competitive power of the telephoner. ?Easy expansion of the confederacys activities. ? aggroup spirit of the management is raised. ?Risk-taking capacity is increased. [ ?No fear of shortfall of [ capital. ? baron to face depression period is increased. ~The main Demerits/Disadvantages: plaster bandage Companys nous View: (i) It reduces the earning capacity of the corporation; (ii) Reputation and seemliness of the association is adversely affected, i.e., reduced; (iii) Company takes resort to cheating(prenominal) practices; (iv) role of accounts etc. by the company; (v) Feeling of asymmetry 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) introduction of mystery reserves, (ii) Higher rate of dividend, (iii) Rapid increase in the prices of shares in the stock ex change over; (iv) Symptom of economic successfulness 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) all-embracing pas seul in the prices of shares etc., (ii) Increase in competition, (iii) Increase in glooming activities, (iv) Increase in opportunities for manipulation by management, (v) Industrial dealing tend to be strained, (vi) Dissatisfactio n amongst consumers, they feel they are bein! g victimize by the company, (vii) Increase in the tax burden of the company, (viii) change magnitude Government interference etc. ]  Auto answered| fit 1|beboythewizkid|Points 1528|If you want to get a full essay, grade it on our website: BestEssayCheap.com

If you want to get a full essay, visit our page: cheap essay