Captilisation

User: compare and contrast the pros and cons of over capitalization and under capitalization  Weegy: The main advantages or merits of overcapitalization are: ? bear on in the competitive power of the telephoner. ?Easy expansion of the confederacys activities. ? team spirit of the management is raised. ?Risk-taking capacity is increased. [ ?No fear of famine of [ capital. ? baron to face depression period is increased. ~The main Demerits/Disadvantages: trunk Companys nous View: (i) It reduces the earning capacity of the guild; (ii) Reputation and good will of the follow 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 imbalance 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) reality of mystery reserves, (ii) Higher rate of dividend, (iii) Rapid increase in the prices of shares in the stock ex switch over; (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) coarse pas seul in the prices of shares etc., (ii) Increase in competition, (iii) Increase in morose activities, (iv) Increase in opportunities for manipulation by management, (v) Industrial traffic tend to be strained, (vi) Dissatisfaction amongst consumers, they feel they are being victimized by the company, (vii) Increase in the tax burden of the com! pany, (viii) change magnitude Government interference etc. ]  Auto answered| stool 1|beboythewizkid|Points 1528|If you want to get a full essay, arrangement it on our website: BestEssayCheap.com

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