Question

Difference between over capitalisation and under capitalisation in tabular form

Answer 1

1. Over-capitalisation involves a great-strain on the financial resources of a company whereas under-capitalisation implies high rate of earnings on its shares.

2. The remedial procedure of over-capitalisation is more difficult and expensive as compared to the remedial procedure of under-capitalisation.
Under-capitalisation accelerates cut-throat competition amongst companies; results in discontentment among employees and grouse amongst customers; whereas over-capitalisation adversely affects the shareholders and endangers the economic stability and Social prosperity.

4. Over-capitalisation is a common phenomena than under-capitalisation which is relatively a rare phenomena.