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Is it true that overtrading can effectively lead to overcapitalisation? For example, the business is growing but without more short-term finance, it is not converting receivables into cash quickly enough to pay its payables (which have also grown)?
No. The problem created by overtrading is possible undercapitalisation.
Have you watched my free lectures on this, where I explain what is happening?
Okay thanks for the explanation. Yes I did, however it took me another quick view to fully understand. Thank you for your lectures, really makes the course enjoyable!
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