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Impaired Capital

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Impaired capital
When a company's total capital is less than the par value of all its capital stock.

Impaired Capital
A situation in which the total value of the capital in a publicly-traded company is less than the par value of its capital stock. Companies with impaired capital have usually taken out too many loans or have made a series of poor investments. Impaired capital may force a company to issue more stocks (for example, in a down round) or to liquidate.


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Paul Tucker, a member of the Bank of England's Monetary Policy Committee, warned last week: 'We must try to avoid a vicious circle in which tighter liquidity conditions, lower asset values, impaired capital resources, reduced credit supply, and slower aggregate demand feed back on each other.
Some insurance companies withdrew from the market because of their inability to compete successfully, impaired capital positions or because of a decrease in the availability of reinsurance.
Impaired capital assets that will no longer be used by the government should be reported at the lower of carrying value or fair value.
 
 
 
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