what is the meaning of equity shares ?with advantages ,disadvantages and features?
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equity shares:represents ownership capital of a company. dont enjoy preferential rights in the matter of claim of dividend or repayment of capital.
dont get fixed dividend but paid on basis of earning by the company. they bear maximun risk.equity shareholders are owners of company they have riht to vote and participate in the management
merits
1 suitable for investors willing to assume risk for higher returns
2 payment of equity dividend not compulsory
3 serves as permanent capital as it is to be repaid only at time of liquidation of a company
4 do not carry any charge on the assests of the company
5 right to vote participate in management
6 provides credit worthiness
limits
1 investors who want steady income may not prefer equity shares
2 cost of equity shares is generally more as compared to cost of rasing funds through sources
3 issue of additional equity share dilutes the voting power and reduces earnings of existing shareholders
4 issue of earning shares is time consuming
dont get fixed dividend but paid on basis of earning by the company. they bear maximun risk.equity shareholders are owners of company they have riht to vote and participate in the management
merits
1 suitable for investors willing to assume risk for higher returns
2 payment of equity dividend not compulsory
3 serves as permanent capital as it is to be repaid only at time of liquidation of a company
4 do not carry any charge on the assests of the company
5 right to vote participate in management
6 provides credit worthiness
limits
1 investors who want steady income may not prefer equity shares
2 cost of equity shares is generally more as compared to cost of rasing funds through sources
3 issue of additional equity share dilutes the voting power and reduces earnings of existing shareholders
4 issue of earning shares is time consuming
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