Why the company prefering prefence capitalrather than
debenture capital?
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Answer / manju gowda
with an object of diversifying the risk during the loss
years of the company preference shares are issued. but in
case of debentures even during the times of loss years also
interest should be paid along with fixed interest. and more
over preference dividends payments can also be paid during
next years profit of the companies in case of cumulative
preference shares. so for all this reasons company issue
preference shares instead of debentures.
| Is This Answer Correct ? | 4 Yes | 0 No |
Answer / s.rudranand
prefrence capital(share) is a fixed capital or investment
to the company where the company has to pay fixed divident
to the investors.
debentures are liabilities to the company and they have to
pay fixed intrest to the holders, but it will reduce the
profits and company performance is depended on profits and
its share price, there is a posibility of fall in share
price in the market due to less profits. so, company
prefeing prefrence capital than debenture
| Is This Answer Correct ? | 5 Yes | 3 No |
Answer / giri
prference capial is prefered by the companies because of
the a)No charge is created on the assets of the company. b)
There is no obligation to pay preference dividend all the
time. During loss making year company may defer preference
dividend.
But in case of debentures, the company either make profit
or loss, it has to pay to debentureholders, else they can
sue the company or sell the assets to recover their loan
amount.
| Is This Answer Correct ? | 1 Yes | 0 No |
Answer / srikar
there is an obligation to pay interest but no such thing in
case of preference(IF OC. IS IN losses)
| Is This Answer Correct ? | 0 Yes | 3 No |
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