Financial Planning: Short, Medium, Long Term

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What is the consequence of overcapitalization in a company?

Inefficient use of resources

Which scenario best describes balanced capitalization?

A manufacturing company carefully assessing its capital needs

What is undercapitalization in a company?

Insufficient capital to meet operational needs

Which best describes equity capital?

<p>Raised by issuing shares to shareholders</p> Signup and view all the answers

What is debt capital in a company?

<p>Obtained through loans or bonds</p> Signup and view all the answers

In terms of capital gearing, what does it mean to be highly geared?

<p>Depends significantly on debt for financing</p> Signup and view all the answers

What is the primary issue with overcapitalization?

<p>Reduced return on equity</p> Signup and view all the answers

How does undercapitalization impact a company's operations?

<p>Insufficient funds for operational needs</p> Signup and view all the answers

'Balanced Capitalization' is achieved when:

<p>'The firm maintains a harmonious capitalization with its operational needs'</p> Signup and view all the answers

'Debt-Equity ratio' refers to:

<p>'The capital structure of a company'</p> Signup and view all the answers

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