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Thank you so much Sir. Your explanantion has made it more clearer for me to understand overcapitalisation and overtrading. It’s helped me to appreciate and be able easily identify the complications that they can cause as well.
Thank you so much.
Sir, I have a 2017 june edition of BPP Financial Management books. Is it fine to refer it for my study purpose for June 2020???
Thank you for explaining so well, Sir. 馃檪
Thanks John for this presentation on over/under capitalization. I really do appreciate the distinction more so with the illustration.
Thanks for the illustrations used. It was very helpful to me. What level of working capital should be business then maintain in order to avoid overtrading or overcapitalization?
*should the instead of be.
There is no ‘best level’ of working capital. It all depends on the type of business.
To avoid over-capitalisation they should make sure that they are managing each part of working capital efficiently (as explained in the following chapters).
To avoid overtrading, they should plan properly when expanding to make sure they raise sufficient finance not just to finance the extra machines etc. but also to finance the extra working capital needed.
Noted with thanks sir
Dear Sir,
How did we arrive of $ 100 bank over draft?
It is the missing figure to make the SOFP balance 馃檪