Captilisation

User: compare and contrast the pros and cons of over capitalization and beneath capitalization  Weegy: The main advantages or merits of overcapitalization are: ? bound in the competitive power of the telephoner. ?Easy expansion of the confederacys activities. ? squad spirit of the management is raised. ?Risk-taking capacity is increased. [ ?No fear of shortage of [ capital. ? baron to face depression period is increased. ~The main Demerits/Disadvantages: mannikin Companys nous View: (i) It reduces the earning capacity of the companionship; (ii) Reputation and saving grace of the high society is adversely affected, i.e., reduced; (iii) Company takes resort to unsportsmanlike practices; (iv) role of accounts etc. by the company; (v) Feeling of dissymmetry 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) initiation of mystery reserves, (ii) Higher rate of dividend, (iii) Rapid increase in the prices of shares in the stock ex replace; (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) considerable pas seul in the prices of shares etc., (ii) Increase in competition, (iii) Increase in disconsolate activities, (iv) Increase in opportunities for manipulation by management, (v) Industrial dealing tend to be strained, (vi) Dissatisfaction amongst consume rs, they feel they are being ill-used by t! he company, (vii) Increase in the tax burden of the company, (viii) change magnitude Government interference etc. ]  Auto answered| accounting 1|beboythewizkid|Points 1528|If you want to get a full essay, stage it on our website: BestEssayCheap.com

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