Q.9. Mr.Rameshuar is the finance manager of KP Software Ltd. He believes that there are several benefits of issuing equity shares to raise long term finance. Do you agree with him? Explain any four reasons in support of your answers.
Dear Srishti,
Issuing equity shares to raise long term finance has several benefits such as:
1. Lesser risk is involved in issuing equity shares
2. There is no compulsion to pay dividends to shareholders in case of no profits
3. Liability is limited
4. There is no obligation to repay the principle amount (till the time of liquidation)
Issuing equity shares to raise long term finance has several benefits such as:
1. Lesser risk is involved in issuing equity shares
2. There is no compulsion to pay dividends to shareholders in case of no profits
3. Liability is limited
4. There is no obligation to repay the principle amount (till the time of liquidation)