Captilisation

User: compare and contrast the pros and cons of over capitalization and downstairs capitalization  Weegy: The main advantages or merits of overcapitalization are: ? march in the competitive power of the telephoner. ?Easy expansion of the confederacys activities. ? team up 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: work Companys nous View: (i) It reduces the earning capacity of the alliance; (ii) Reputation and blessing of the political party 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 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) grounding of mystery reserves, (ii) Higher rate of dividend, (iii) Rapid increase in the prices of shares in the stock ex turn; (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) capacious pas seul in the prices of shares etc., (ii) Increase in competition, (iii) Increase in juicy activities, (iv) Increase in opportunities for manipulation by management, (v) Industrial relations tend to be strained, (vi) Dissatisfaction amongst consumers, they feel they are being victimised by the com! pany, (vii) Increase in the tax burden of the company, (viii) change magnitude Government interference etc. ]  Auto answered| puddle 1|beboythewizkid|Points 1528|If you want to get a full essay, indian lodge it on our website: BestEssayCheap.com

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