Nifty 50
Sensex
US Tech 100
Dow Jones
FTSE
Dax
CAC
Nikkei 225
Hang Seng
SSE Composite
TAIEX
KOSPI
Gift Nifty
Strategy Indices
Broad Market Indices
Sectoral Indices
Thematic Indices
Home
Finance GlossaryOvercapitalized
Overcapitalized
Definition of Overcapitalized
A company is said to be overcapitalised if it has issued more debt and equity than is financially prudent or necessary, resulting in an inefficient capital structure. This means that the company is carrying an excessively large amount of capital (whether in the form of high paid-up capital, retained earnings, or borrowings) compared to its actual needs or its ability to generate proportionate profits.
Related Terms
Annual Net Profit Margin
A Net Profit Margin is the ratio of a company’s net profits to revenues. The formula to calculate Net Profit Margin is:
Net Profit Margin = Net Profit* / Revenue * 100
*Net profit = Revenue - Cost of goods - Operating Cost - Other Expenses - Interest - Taxes
Net Profit Margin is expressed as a percentage, which means that you can compare the financial health of multiple companies.
A company can use its Net Profit Margin to understand whether its strategies and business models are effective.
Net Profit Margin = Net Profit* / Revenue * 100
*Net profit = Revenue - Cost of goods - Operating Cost - Other Expenses - Interest - Taxes
Net Profit Margin is expressed as a percentage, which means that you can compare the financial health of multiple companies.
A company can use its Net Profit Margin to understand whether its strategies and business models are effective.
Donchian Channels
A Donchian Channel is the area between upper (highest price) and lower (lowest price) bands formed around the median as a result of calculating the moving average of a security’s price over a period of time. Visually, the Donchian Channel will have three lines.
Illiquid Asset
An illiquid asset is something of value that can not be exchanged for cash easily. Although an illiquid asset may have value, you will not be able to find buyers for it readily. As a result, illiquid assets are typically sold at a significant discount or worse, lose value and expire.
Lead Underwriter
The lead underwriter is a financial institution that is in charge of ensuring that an IPO is successful on the primary market. Companies may also hire lead underwriters to carry out a FPO.
Commodity
A commodity refers to physical goods and raw materials like aluminium, cotton, copper, sugar, steel, zinc, and others. Commodities are an essential part of the day-to-day life of individuals, companies, and industries.
But they can’t be traded like stocks in India. Instead, a commodity trader will enter into either of these three contracts to secure commodities or benefit from its price fluctuations:
But they can’t be traded like stocks in India. Instead, a commodity trader will enter into either of these three contracts to secure commodities or benefit from its price fluctuations:
- Futures contracts
- Options contracts
-
Cash contracts
These derivative contracts are traded on commodity exchanges in India like:
- Indian Commodity Exchange (ICEX)
- Multi Commodity Exchange of India (MCX)
- National Commodity & Derivatives Exchange Limited (NCDEX)
- National Multi Commodity Exchange of India (NMCX)
Book Running Lead Manager
A book running lead manager is the head or lead of the underwriting process when new shares or securities are issued for their client, most commonly during an IPO.
For context, there was a time when physical ownership certificates were issued. If someone wanted to sell their shares, they’d have to present the ownership certificate and get it transferred to the buyer.
Also known as the book runner, the book running lead manager handles these crucial elements of the underwriting process:
For context, there was a time when physical ownership certificates were issued. If someone wanted to sell their shares, they’d have to present the ownership certificate and get it transferred to the buyer.
Also known as the book runner, the book running lead manager handles these crucial elements of the underwriting process:
- Perform due diligence
- Determine the final offering price
- Record & track interested buyers
- Confirm orders
- Guarantee purchase
Invest & Trade with a Trading
Platform That's #MadeForTrade
Open your Dhan Account in minutes!
