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January 18, 2021 at 5:38 pm
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.
March 12, 2020 at 9:39 am
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???
January 21, 2020 at 8:03 pm
Thank you for explaining so well, Sir. 🙂
October 31, 2019 at 12:27 pm
Thanks John for this presentation on over/under capitalization. I really do appreciate the distinction more so with the illustration.
Samuel Koroma says
July 2, 2019 at 11:44 am
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?
July 2, 2019 at 11:46 am
*should the instead of be.
John Moffat says
July 2, 2019 at 4:45 pm
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.
July 8, 2019 at 12:15 pm
Noted with thanks sir
November 5, 2018 at 2:05 pm
How did we arrive of $ 100 bank over draft?
November 5, 2018 at 3:17 pm
It is the missing figure to make the SOFP balance 🙂
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