Undercapitalization
Undercapitalization is the situation where a company does not have sufficient capital to conduct normal business operations and grow.
Benefits
Undercapitalization highlights the need for adequate funding to support growth and stability.
Frequently Asked Questions
What is the meaning of undercapitalization?
Undercapitalization happens when a company doesn’t have enough capital to run operations and grow.
What is the disadvantage of undercapitalization?
The disadvantage of undercapitalization is that it limits a company`s ability to invest in growth, meet financial obligations, and maintain smooth operations, potentially leading to business failure.
Is undercapitalization the lack of funding to operate a business?
Yes, undercapitalization means not having enough money to run and grow a business effectively.
Key Takeaway
Undercapitalization stresses the need for adequate funding for sustained growth.