Question

What advantages does issue of debentures provide over the issue of equity shares?

Answer 1

Answer:-

_________

Advantages over issue of equity share:-

____________________________________

➡It is preferred by investors who want fixed income at lesser risk.

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

➡The issue of debentures is suitable in the situation when the sales and earning are relatively stable.

➡debentures do not carry voting rights, financing through debentures does not dilute control of equity shareholders on management.

➡Financing through debentures is less costly as compared to cost of preference or equity capital as the interest payment on debentures is tax deductibel.

thanks!

to

➡ ŔÀthi

Answer 2

Answer:

Explanation:

    Advantages of issue of debentures

        provide over the issue of equity

                       shares :

1. It is preferred by investors who want fixed income at lesser risk;

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

3. The issue of debentures is suitable in the situation when the sales and earning are relatively stable;

4. As debentures do not carry voting rights, financing through debentures does not dilute control of equity shareholders on management.

5. Financing through debentures is less costly as compared to cost of preference or equity capital as the interest payment on debentures is tax deductibel.

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