Question

Enumerate the advantages and limitations of borrowed capital.

Answer 1

Disadvantage :

Disadvantage :Debentures are fixed charge funds and do not participate in profits of the company.

Disadvantage :Debentures are fixed charge funds and do not participate in profits of the company.Advantage :

Disadvantage :Debentures are fixed charge funds and do not participate in profits of the company.Advantage :It does not affect the owners' control over management;

Disadvantage :Debentures are fixed charge funds and do not participate in profits of the company.Advantage :It does not affect the owners' control over management;Interest is treated as an expense, so it can be charged against income;