👉 Overcapitalisation refers to a situation where a company's financial position is so strong that it becomes difficult for other companies to compete with them. This can happen due to several factors such as excessive debt, high levels of capital expenditure, and excessive investment in non-core businesses. In this case, the term "overcapitalised" refers to the extent to which a company's financial resources are overused or beyond its financial capabilities.
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What is the definition of Overcapitalisation? 🙋
👉 Overcapitalisation is a situation where an organization or company has a significant amount of excess capital relative to its current liabilities and assets, which can lead to financial distress. This excess capital may be due to an investment in new projects, acquisitions, or mergers that exceed the company's ability to generate revenue from existing operations. Overcapitalization can also occur when an organization is unable to meet its obligations on its debt or equity securities because it has too much capital. Overcapitalisation can lead to various
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What is the definition of Overcapitalising? 🙋
👉 Overcapitalisation refers to an excessive reliance on external capital, such as debt or equity, without adequate internal resources and management capability. This can lead to a high level of risk and potentially poor performance. In business and finance terms, it involves using more money than is necessary for the purpose of production or operation, which can result in higher costs, slower growth, and reduced profitability. Overcapitalisation can also be seen as an ethical issue, as it may undermine the value of a company's assets
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