Over-capitalization and Under-capitalization: The total amount of funds available to an undertaking should be neither too much nor too low. An important question, therefore is the question of capitalization of the company, i.e., the determination of the amount which the company should have at
Definitionof Over Capitalization
Over Capitalization is a Situation where a firm has more capital than it catered-for or needs. Thus, its assets are worth less than its issued share capital, and the earnings are insufficient to pay dividend and interest.