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Overcapitalization

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Overcapitalization
Said to occur when a firm cannot service its debt even though its debt/equity ratio is not excessive.
Overcapitalization
A situation in which a company has too much capital. An overcapitalized company has an excessive amount of cash or liquid assets; it may find itself in a position, for example, of paying high dividends that it would have difficulty reducing in the future. Its earnings may or may not adequately reflect the capital invested in the company. An overcapitalized company may repay its debt or make a tender offer for shares in order to reduce its capital.
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One exception is Environmental Defense, which supports ITQs as an effective tool against over-fishing and overcapitalization.
The Privatization of the Oceans by Leal, Donald R. / Independent Review
As discussed, upstream businesses forcing manufacturers to hold inventory longer in the business year can cause an overcapitalization of tax inventory and increase taxable income.
Inventory trends: the "Wal-Mart" effect by Petersen, Dustin C. / The Tax Adviser
Overcapitalization has the effect of reducing current expenses and overstating current income.
Financial reporting: the abuse-prone areas: a refresher on those ... by Darazsdi, James J. / Directors & Boards
 
 
 
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