Undercapitalization is when a business cannot finance its operations, leading to bankruptcy. It can occur due to declining sales or a lack of initial funding. Companies must adapt or seek outside help to survive. Undercapitalization is a condition involving the inability to sufficiently finance a business venture. Essentially, the amount of revenue generated and other […]
Interest capitalization occurs when a lender allows a borrower to defer paying interest on a loan, resulting in an increase in the final amount owed on the loan. It is common in student loans and construction loans, and borrowers can avoid it by making interest-only payments. Capitalization of interest occurs when a lender allows a […]
