Financial Management

Meaning of Over-Capitalisation: Over-capitalisation refers to that state of affairs where earnings of a company do not justify the amount of capital invested in its business. According to Gerstenberg,  “A company is over-capitalised when its earnings are not large enough to yield a fair return on the amount of stock and bonds that have been issued, or when the amount of securities outstanding exceeds the current value of the assets” .

Financial Management is concerned with planning, directing, monitoring, organizing and controlling monetary resources of an organization. Financial Management simply deals with management of money matters. Management of funds is a critical aspect of financial management.