Capitalization Question: Download Questions PDF
Explain what sort of remedies is available for companies to overcome the situation of over capitalization?
Answer:
There are different sorts of remedies available for over capitalization which are as follows:-
1) The company can overcome Over-capitalization by reducing its capital so as to obtain a satisfactory relationship between proprietors’ funds and net profit.
2) The company can overcome this phase by spending the money wisely and in those areas where they can get some profits.
3) The company can also overcome this by utilizing the money which has been idle in the bank and put up in some investment and has not been used till now.
4) The company can also overcome this by removing the over-valuation policy by bringing down the values of assets to their proper values.
1) The company can overcome Over-capitalization by reducing its capital so as to obtain a satisfactory relationship between proprietors’ funds and net profit.
2) The company can overcome this phase by spending the money wisely and in those areas where they can get some profits.
3) The company can also overcome this by utilizing the money which has been idle in the bank and put up in some investment and has not been used till now.
4) The company can also overcome this by removing the over-valuation policy by bringing down the values of assets to their proper values.
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