Undercapitalization refers to the problem of
A) insufficient start-up funds.
B) inadequate control of expenses.
C) inappropriate cash flows.
D) undervalued capital stock.

Question

Quizplus · Accepted Answer

Undercapitalization refers to the situation where a business does not have enough funds to operate successfully. This can be due to insufficient start-up funds, lack of investment or poor cash flow. It can lead to many problems such as an inability to invest in the business, difficulty in servicing debt, and reduced ability to respond to unexpected events.

Undercapitalization Refers to the Problem of