What are the main differences between corporate debt and
equity? Why do some firms try to issue equity in the guise
of debt?
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Answer Posted / archana kulkarni
Equity capital is own fund whereas corporate debt is owed
fund.
Interest payment is mandatory on debt each year whereas
dividend is not re madatory to be declared and paid every
year. Also equity is long term capital and payable by
Company on liquidation whereas debt is to be paid on
specific time as prescribed in terms & conditions at the
time of issue. Therefore some firms try to issue equity in
the guise of debt.
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