Undercapitalization

Undercapitalization -  Undercapitalization refers to any scenario or context where companies are in a dire position of not being able to get the funding or monies they require. Here are some of the ways companies may be suffering from undercapitalization: (i) affordability of their operational expenses become an issue, (ii)  lack of capital, (iii) several real bankruptcy risks and triggers, too much financial pressure, overextended, (iv) simply being over-exposed to risk.  The inability of/for businesses to fund itself means it does not have enough money to run and operate any longer. There is simply not enough cash on-hand, running out of money, not enough coming in (generated revenue/income), to cover all the costs, ongoing expenses associated with the business. It is not sustainable at a profitable level and could lead to either bankruptcy and/or perhaps even closing it down or dissolution.