Help me with this one
Dear Student
1. Equity share capital are permanent in nature as they are always with the company till the winding up of company. Equity share capital are neither convertible nor refundable they are always held with the company and returned at the time of winding up of the company.
2. Equity shareholder are residual owner as they are always paid at the last if company earns profit. So we can said that they are paid what is left with the company at the end after paying all its other claims . There is no fixed dividend percentage if company earn more than they may get more dividend and if company is in loss than nothing is paid to the equity shareholder.
3. Equity share capital is risk capital because there is no fixed return for equity shareholder they are called as risk capital because they may earn good dividend if company earn good profit and if company is not doing well or in loss than equity shareholder will get nothing even at the time of winding up after paying others like external liabilities , debentures preference share if anything left than only it will paid to equity share holder that is why it is said that equity share capital is risk capital.
Regards
1. Equity share capital are permanent in nature as they are always with the company till the winding up of company. Equity share capital are neither convertible nor refundable they are always held with the company and returned at the time of winding up of the company.
2. Equity shareholder are residual owner as they are always paid at the last if company earns profit. So we can said that they are paid what is left with the company at the end after paying all its other claims . There is no fixed dividend percentage if company earn more than they may get more dividend and if company is in loss than nothing is paid to the equity shareholder.
3. Equity share capital is risk capital because there is no fixed return for equity shareholder they are called as risk capital because they may earn good dividend if company earn good profit and if company is not doing well or in loss than equity shareholder will get nothing even at the time of winding up after paying others like external liabilities , debentures preference share if anything left than only it will paid to equity share holder that is why it is said that equity share capital is risk capital.
Regards