Capitalization Question:
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Explain Balanced Capitalization?

Answer:

Capitalization is a collection of share capital, loans, reserves and debentures. It represents permanent investment in companies and it also removes the need of long-term loan plans. It is used to show the reality of the industry by promoting competition, development, profit and investment between individuals, companies and businesses. Balance capitalization is part of this Capitalization only where it is compared to the relative importance, value and other things to make it proportionate in every sense. In balance capitalization debits and credits should be equal on both sides and the share should be shared among all in equal proportions.

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Can you please explain the difference between Overcapitalization & undercapitalization?Tell me what remedies are available for companies to overcome undercapitalization?