- Watered capital is called so because the flow of money can be seen at the time of promotional events only and then money flows like water with the capital in the initial period at the time of promotion whereas Over capitalisation can be calculated after the company has worked for some years and at the end only.

- Over capitalization can be caused by watered capital whereas water capital is not caused by overcapitalization and it can be calculated at the time when the company is taking the promotional event in hand.