overtrading


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Related to overtrading: overcapitalisation

Overtrading

Excessive broker trading in a discretionary account. Underwriters persuade brokerage clients to purchase some part of a new issue in return for the purchase by the underwriter of other securities from the clients at a premium. This premium is offset by the underwriting spread.

Overtrade

1. To make both buy and sell orders through different brokers to create the impression of increased interest in a security and thereby raise the price. This is a form of price manipulation and is forbidden by the Securities Exchange Act of 1934. It is less formally known as churning.

2. In brokering, to make more trades on a client's holdings than are necessary in order to maximize commissions. Overtrading is illegal.

overtrading

a situation in which a firm expands its production and sales without making sufficient provision for additional funds to finance the extra WORKING CAPITAL needed. Where this happens the firm will run into LIQUIDITY problems and can find itself unable to find the cash to pay suppliers or wages. See also WORKING-CAPITAL RATIO, CURRENT RATIO, CASH FLOW.

overtrading

a situation where a FIRM expands its production and sales without making sufficient provision for additional funds to finance the extra WORKING CAPITAL needed. Where this happens, the firm will run into LIQUIDITY problems and can find itself unable to find the cash to pay suppliers or wages. See CASH FLOW.
References in periodicals archive ?
When you look back statistically and say if those malls are overtrading today, then there's a case to be made to almost double the space that's available in terms of retail, just to handle the tourist trade.
Sometimes it pays to stay small - too rapid growth can lead to overtrading and business failure.
Overtrading appears to be affecting the industry as 737 significant players chase sales at the expense of profitability.
The business opened but got into an overtrading situation.
MONEY reviews how overtrading, excessive faith numerology (too much focus on 90-day moving averages), "the great company syndrome," and a belief in "dream stocks" can lead investors in the wrong direction.
The Elements of Investing hacks away at all the overtrading and over thinking so predominant in the hyperactive thought patterns of the average investor.
Overtrading after a recession is the biggest problem SMEs face.
Traditionally, each time the economy recovers from a recession or downturn, a large number of businesses fall victim to overtrading and end up failing in what should be good times, despite having survived years of bad.
Viewed dispassionately, the very fact they are high growth leaves them vulnerable to overtrading.
If the upturn does not happen relatively soon, the market may stagnate and go into hibernation; and if the recovery happens too quickly, we will be in danger of a double dip recession through overtrading in an environment where working capital headroom is extremely tight for many businesses.