Over-capitalization results from __________.

A. payment of excessive amount for goodwill

B. underestimating the rate of capitalization

C. raising more money than can be profitably used

D. raising only the money

Answer: Option C

Solution(By Examveda Team)

Over-capitalization results from raising more money than can be profitably used. Over-capitalisation takes place when a company raises more money by the issue of shares and debentures than can be profitably used.