Question

what are the merits and demerits of the issuing debentures?​

Answer 1

Answer:

Advantages and Disadvantages of Debentures

Financing through them is less costly as compared to the cost of preference or equity capital as the interest payment on debentures is tax deductible. The company does not involve its profits in a debenture.

Explanation:

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Answer 2

Debentures are sources of borrowing using which firms can borrow money from people.

Explanation:

1. Debentures are the instruments which are used for borrowing long-term finances from general public by any organization.
2. Debentures are generally secure and have fixed returns. The debenture holders are not the owners of the businesses due to which they do not interfere in the functioning of any firm.
3. However, debenture holders are the creditors of a company and have to be paid on priority in case of dissolution of the company. Due to this, there is always a burden of liability on the company.