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Overcapitalization

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Overcapitalization
When a company has too much capital for the needs of its business.

Notes:
You might think that more capital is always better, but this isn't the case. If a business has more money than it can work with, it will be burdened with high interest charges and/or dividend payments. To reduce overcapitalization a company can repay its debt or do a share buyback.

Overcapitalization
Said to occur when a firm cannot service its debt even though its debt/equity ratio is not excessive.
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