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 ?
We are in a position where many of our existing stores have found themselves overtrading.
Macadam revealed that several malls such as The Dubai Mall and the Mall of the Emirates are known in the industry to be overtrading, and that on some days it is not as comfortable for visitors to shop there as they normally would.
However, it is important businesses keep in mind not to overstretch themselves on the run up to Christmas, as overtrading now can have a significant impact on a business' future cash flow."
But I talk with the CEO every clay about the cash flow risks we run by overtrading. The board is also aware of this, but it has not acted to raise more cash to ensure that we can pay our creditors when necessary.
"While larger corporates have taken full advantage of the market opportunities available to them, a growing number of SMEs are overtrading and risk falling at the last hurdle."
David Macadam, CEO of the Middle East Council of Shopping Centres, said: "Right now, Dubai Mall and Mall of the Emirates, as two examples, are the most successful malls in Dubai and they're both, we call them in the industry, overtrading for their size, which means they have more people than is probably comfortable to make the maximum sales potential inside each.
Companies seeing new opportunities as the economy picks up can find themselves unwittingly overtrading for lack of cash flow.
Before the opening of the stock market, participants were given the following instructions: "These experiments will be conducted in a simulated stock investment situation, and the goal of these experiments is to study overtrading and the impact of personality type on stock trading volume.
Following a broad economic history of Asia from 1500 to the present, chapters examine the impact of the 2008 financial crisis and its global aftermath; policy responses to the crisis in the region and in Japan, China, and Russia specifically; issues of export-led development, Chinese overtrading, counter-crisis trade expansion, and business cycle decoupling; lessons for Asia from the BRIC countries (the rising economic powers of Brazil, Russia, India, and China); the implications of the Eurozone crisis and global financial imbalances; and intra-Asian stratification.
The paper's findings offer a new explanation for the overtrading puzzle and lend microfounded support to asset-pricing models that incorporate consumption externalities (i.e., "keeping up with the Joneses") in consumer preferences.
"I am in favour of the creation of a new supermarket, as Tesco in Talbot Green is overtrading.