Under capitalization

Under capitalization,

Definition of Under capitalization:

  1. Situation where a business does not have sufficient stockholders funds for its size of operations. An undercapitalized firm does not have enough cash to carryout its functions and usually does not qualify for bank or other loans due to its unacceptably high loan-to-equity ratio. Under capitalization is one of the major causes of business startup failures.

Meaning of Under capitalization & Under capitalization Definition