under capitalization |
|
Definition
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.
email to a friend
print this definition
cite this definition
link to this page
under capitalization is in the Accounting & Auditing and Banking, Commerce & Finance subjects.
This content can be found on the following page:
http://www.businessdictionary.com/definition/under-capitalization.html