Capital Rationing mean limited available sources of funding to implement the projects.
Types of Capital Rationing
There are mainly two types of Capital rationing
- Hard Capital Rationing- imposed by external factors
- Soft Capital Rationing - internally imposed by Management
The following are the main reasons for Hard Capital Rationing
- Poor performance
- Poor Management
- Adverse Economic Conditions
- Management want to concentrate on main business
- Limited Skilled Management to undertake many projects
- Management is not interested in external borrowings
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