Day: October 17, 2020

Contributed by the preference share holders. They do not carry voting power and the holders of these shares cannot exercise any control on the affairs of the company. Preference shares have a prior right to fixed dividend form profits and Read More …

Debentures A debenture is a long term promissory note for raising loan capital. The firm promises to pay interest and principal as stipulated. Debentures mature between 10 – 15 years. Interest on debentures is payable twice a year and it Read More …

Bonds refer to both secured and unsecured debt. Both are papers acknowledging debt. They are long term debt instruments that promise to pay interest periodically.   Types of Bonds (a)       Floating rates bonds The coupon rate or contractual rate of Read More …

Features Debt securities are fixed income securities. Interest on debt is an allowable deduction for tax purposes. It is usually secured. It’s provided with conditions. It can be raised faster than ordinary share capital It increases the firm’s gearing and Read More …

Features Ordinary shares are variable income securities. Ordinary share dividend is not an allowable deduction for tax purposes. It is an external source of fund Providers of this capital get ownership and voting rights It is a permanent source of Read More …

Sources from which a business organization may obtain funds for its operations can be classified in four different ways as follows:   Classification according to the duration These sources are: Long term sources funds: These funds are refundable after a Read More …