What is capital deficiency?

Capital deficiency refers to a situation where an entity's liabilities exceed its assets, indicating that it does not have enough capital to cover its obligations. This condition can signal financial instability and may lead to insolvency if not addressed. Businesses facing capital deficiency may need to seek additional funding, restructure debt, or reduce expenses to restore financial health. It is a critical concern for both businesses and regulatory bodies, as it can affect operations and stakeholder confidence.