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Under capitalisation

How does under capitalisation increases the rate of dividend in comparison to similar situated companies in the industry?


Swathi Krishna

Swathi Krishna

CA Inter

7K+

07-Aug-20 18:26

29

Answers (2)

The term under-capitalisation should never be considered synonymous with inadequate capital. The profits are higher than warranted by the book value of its assets. Such a company can pay a higher rate of dividend and the market value of its shares is much higher than its face value.


Lavanya Chitturi

Lavanya Chitturi

Moderator

08-Aug-20 14:11

Thank you ma'am


Swathi Krishna

Swathi Krishna

CA Inter

7K+

08-Aug-20 17:23

Happy Mother's Day
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