13.4 WAY TO OPTIMUM CAPITALISATION
The preceding discussion makes it clear that under-capitalisation is a lesser evil than over-capitalisation. So, whenever either of the two appears, the firm should try to remedy the situation and attain optimum capitalisation. There are two ways in which the problem can be tackled. One is the capital re-organisation, while the other is the maintenance of desired earnings.
under-capitalisation is a lesser evil than overcapitalisation.
13.4.1 Re-organisation of Capital
Re-organisation of capital includes several measures. Important among these are:
- Redemption of high interest debt and of high dividend preference shares;
- Changes in the par value of shares;
- Changes in the number of shares including the capitalisation ...
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