Define: Undercapitalisation

UK Accounting Glossary

Definition: Undercapitalisation

Quick Summary of Undercapitalisation

Under-capitalisation refers to any situation where a business cannot acquire the funds they need.

What is the dictionary definition of Undercapitalisation?

Dictionary Definition

The state of a company that doesn’t have sufficient capital or reserves appropriate for the size of it’s operations.

For example: this may be due to the company growing too quickly.

Although such a company may be generating profits it may also be unable to convert these profits, both sufficiently and swiftly into cash in order to pay it’s debts.


Full Definition of Undercapitalisation


Examples of Undercapitalisation in a sentence

Undercapitalisation remains the primary reason for business failure within the U.S. today; this is closely followed by insufficient business knowledge and market awareness.

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Undercapitalisation. Payroll & Accounting Heaven Ltd. November 19, 2019
Chicago Manual of Style (CMS):
Undercapitalisation. Payroll & Accounting Heaven Ltd. (accessed: November 19, 2019).
American Psychological Association (APA):
Undercapitalisation. Retrieved November 19, 2019, from website:

Definition Sources

Definitions for Undercapitalisation are sourced/syndicated from:

This glossary post was last updated: 5th May 2019.