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Debentures also known as loan notes lean more towards non current liabilities i.e. bank loans, than ordinary shares which is equity.
The interest from debentures may be higher than dividen paying shares in the early part of a firm's life; later on it may be more advantageous to hold ordinary shares as dividends paid out can outperform capital gain from interest paid on loans.
Also ordinary shares have voting rights; if enough are purchased by a stakeholder, the stakeholder can influence the company's direction and use of profits. Debenture owners cannot do the same.
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∙ 11y ago
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How does a term loan differ from a non invertible debenture?
Noninvertible debenture
What are the different sources of capital?
· Bank lending· Capital markets· Debenture· Deferred ordinary shares· Franchising· Government assistance· Hire purchase· Loan stocks· New share issue· Ordinary shares· PARTS· Preference shares· Retained earning· Rights issue· Sources of funds· Venture capital· Rights issue· Sources of funds· Venture capital
What is preference share?
Preference shares are shares whose dividends are paid out first before ordinary shares dividends. They so called (preference shares) because they have 'preference' over ordinary shares for payment of dividends.
What are the advantages and disadvantages of direct investment in ordinary shares?
Direct investment in ordinary share is less complicated. However, the disadvantage is that the investor is not protected from risk if they invest directly in ordinary shares.
What are the Two types of shares?
There are different types of shares available. Some examples include ordinary shares, preferred shares, cumulative preference shares, and redeemable shares.
What are the 7 current liabilities?
Equity shares, debenture, secured loan, non secured loan, borrowings, reserves , retained earnings
Can ordinary shares divide into two groups?
it depends
Characteristics of ordinary shares?
There are several characteristics of ordinary shares. Some of them include limited liability, liquidation rights, voting and pre-emptive rights among others.
What is redeemable shares?
These are special shares that you get with ordinary shares from some companies, which they buy back off you at a price instead of paying a dividend.
Difference between debenture and equity share?
1)Preference Shares have 2 preferences first payment of dividend in every year in which dividend is proposed & first share capital of preference shares will be payab;e @ winding up or liquidation of the company,where as equity share holders dividend after preference share holders & even share capital capital is also paid after paying to preference share holders. 2)preference share holders are not owners of the company and do not enjoy any voting right. Where as Equity Shares has voting right & they are the real owners of company. 3)Preference Shares have a finite tenure and carry a fixed rate of dividend where as dividend to equity shares is payable rest of the dividend payable after preference share holders. Detailed answer here: http://financenmoney.in/types-of-share/
What are the 7 non current liabilities?
Equity shares, debenture, secured loan, non secured loan, borrowings, reserves , retained earnings
Is ordinary shares a current or non current asset?
Neither, shares are listed under owners equity.
