undercapitalization
Sign in to saveAlso known as under-capitalization, under-capitalisation, undercapitalisation
Under-capitalization refers to any situation where a business cannot acquire the funds they need. An under-capitalized business may be one that cannot afford current operational expenses due to a lack of capital, which can trigger bankruptcy, may be one that is over-exposed to risk, or may be one that is financially sound but does not have the funds required to expand to meet market demand.
~8 min read
Article
9 sectionsContents
- Causes of under-capitalization
- Capital sources
- Bankruptcy of an undercapitalized subsidiary
- Banking industry
- United States
- Macroeconomics
- Footnotes
- References
- See also
Under-capitalization refers to any situation where a business cannot acquire the funds they need. An under-capitalized business may be one that cannot afford current operational expenses due to a lack of capital, which can trigger bankruptcy, may be one that is over-exposed to risk, or may be one that is financially sound but does not have the funds required to expand to meet market demand.
==Causes of under-capitalization==