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Over Trading :
A company which is under-capitalized will try to do too much with the limited amount of capital which it has. For example it may not maintain proper stock of stock. Also it may not extend much credit to customers and may insist only on cash basis sales. It may also not pay the creditors on time. One can detect cases of overtrading by computing the current ratio and the various turnover ratios. The current ratio is likely to be very low and turn over ratios are likely to be very higher than normally in the industry concerned.
Under Trading:Under-trading is the reverse of over-trading. It means keeping funds idle and not using them properly. This is due to the under employment of assets of the business, leading to the fall of sales and results in financial crises. This makes the business unable to meet its commitments and ultimately leads to forced liquidation. The symptoms in this case would be a very high current ratio and very low turnover ratio. Under-trading is an aspect of over-capitalization and leads to low profit.
What else can I help you with?
Difference between over capitalization and under capitalisation?
OvercapitalizationA company is said to be overcapitalized, when its total capital (both equity and debt) exceeds the true value of its assets. It is wrong to identify overcapitalization with exess of capital because most of the overcapitalized firms suffer from the problems of liquidity.UndercapitalizationUnder-capitalization is just the reverse of over-capitalization. A company is considered to be under-capitalized when its actual capitalization is lower than its proper capitalization as warranted by its earning capacity.
Which is the world's largest bank by market capitalisation?
Industrial and Commercial Bank of China Ltd (ICBC) is the largest bank in the world by both profit and Market Capitalization. It has a market capitalization of over 200,000 billion USD. The only other banks that have a market capitalization in this range (of course lower than ICBC) are China Construction Bank, HSBC, Citigroup and Bank of America.
What was the difference between french and English settlements?
French settlements tended to focus on fur trading and establishing alliances with Native American tribes, while English settlements were more focused on agriculture and building permanent colonies. Additionally, French settlements were less densely populated and more reliant on the fur trade for economic success, while English settlements grew larger and more diverse over time.
What is the difference between there they're and their?
there = over there and denotes place they're = they are (and the apostrophe is in place of the missing letter 'a' their = their house and is a possessive pronoun
What is the difference between over time and overtime?
You know, I was working overtime researching this answer when it dawned on me that over time enough people will answer this question to bring about a sufficient consensus on the differences between these two words.
What are the merits and demerits of over capitalisation and under capitalisation?
I cool
What is the difference between Physical trading and electric trading?
Physical trading is done at a stock exchange (for example the NYSE) and electronic is done over computers from offices and even homes. See the history of the stock market lesson below: http://www.tradingapples.com/beginning-trader-training-seri/
What is the difference between on-line stock trading and day trading?
Online stock trading refers to trading the stock market exclusively, placing orders through your computer.Day trading refers to the amount of time you hold a position in the market and simply means that you enter and exit the position between the open and close of that market on the same day.Day trading is normally online, but doesn't have to be - you can do day trading by placing orders over the phone with your broker.Day trading also is not limited to stocks - you can day trade futures, options, commodities and Forex markets as well.
What is the difference between -2 1 over 2 and -5 3 over 4?
The difference is 3 1/4.
What is the difference between male guinea pigs and females?
If you turn them over you will see a difference
Where did the quarrels over trading rights with Corinth resulted in the?
The Peloponnesian War was brought on by a dispute over Epidamnus between Corinth and Cercyra (Corfu).
What is the difference between 4 over 5 and 2 over 7?
It is: 18/35
What is the difference between a credit memorandum and a debit memorandum?
A Debit Memo is a over payment A Credit Memo is a over payment
What are some advantages of Contracting for Difference trading over other types of stock trading?
The biggest advantage in cfd trading would be not actually owning the stock. You would just be speculating or betting on how well the stock would do. A disadvantage would be possibly having to pay for your losses.
What is over the counter trading?
The opposite of under the counter trading
What is trading over-the counter?
The opposite of under the counter trading
What is the difference between take over and acquisition?
They both mean the same.
