The under-capitalization and liquidity problems of a small firm can directly affect the decision-making process,and survival often becomes the top priority.

Question

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When a small firm is under-capitalized, it may not have enough funds to invest in growth opportunities, research and development, or marketing. It may also not have enough liquidity, which means it may struggle with paying its bills and meeting its financial obligations. These problems can lead to a survival mindset, where the main focus is on staying afloat rather than making long-term strategic decisions.

The Under-Capitalization and Liquidity Problems of a Small Firm Can