issuing of debentures and ploughing back of profits helps in the rapid growth of a business. what is the meaning of debentures and ploughing back of profits in this line.
Riya,
The word Debenture is derived from a Latin word ‘debere’ which means to borrow. A debenture is issued in the form of a certificate under the seal of a company and containing a contract for the repayment of the principal sum after a fixed period of time and payment of interest at regular intervals, generally half yearly. Debentures are issued by a company for acquiring long-term borrowings.
Ploughing back of profits : It is the term used for 'retained earnings'. It implies when a part of the company’s net profits which is reserved for the purpose of reinvesting in the business itself.
The word Debenture is derived from a Latin word ‘debere’ which means to borrow. A debenture is issued in the form of a certificate under the seal of a company and containing a contract for the repayment of the principal sum after a fixed period of time and payment of interest at regular intervals, generally half yearly. Debentures are issued by a company for acquiring long-term borrowings.
Ploughing back of profits : It is the term used for 'retained earnings'. It implies when a part of the company’s net profits which is reserved for the purpose of reinvesting in the business itself.