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Outline similarities between Debt finance and Ordinary Share Capital

Outline similarities between Debt finance and Ordinary Share Capital.

Answers

Lydia
Similarities between Debt finance and Ordinary Share Capital

1. in the case of irredeemable debentures both form a permanent source of finance to the company

2. Both carry explicit costs to the company; interest on debt finance and

3. Dividends on ordinary share capital.

4. both are raised by financially strong companies

5. In case or irredeemable debentures both will entail a permanent cost to the company.

6. In case the company has used overdrafts then both are not secured finances.

7. Both are external sources of finance to the company.

8. Both have control over the company if the company has used debt finance of up to 67% of the company’s total financing.
lydiajane74 answered the question on May 9, 2018 at 19:43

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