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.



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Undercapitalisation. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. July 16, 2019 https://payrollheaven.com/define/undercapitalisation/.
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Undercapitalisation. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/undercapitalisation/ (accessed: July 16, 2019).
American Psychological Association (APA):
Undercapitalisation. PayrollHeaven.com. Retrieved July 16, 2019, from PayrollHeaven.com website: https://payrollheaven.com/define/undercapitalisation/

Definition Sources


Definitions for Undercapitalisation are sourced/syndicated from:

  • Oxford Dictionary Of Economics
  • BusinessDictionary.com
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

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