Why the company prefering prefence capitalrather than
debenture capital?
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Answer Posted / 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.
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