what advantages does issue of debentures provide over issue of equity shares ?

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NCERT solutions- Chapter-8 named as 'Sources of Business Finance'- page206- Long answer- ques 3
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studies/business-studies/sources-of-business-finance/page206-Long-Answers-qno3/1161_5371_34568/what-advantages-does-issue-of-debentures-provide-over-the

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1)Fixed amt of intrest

2)Flexibility

3)Intrest is treated as expence

4)No interfarence

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1. No loss of control : Debentures do not carry any voting rights so it does not dilute the control of equity shareholderson management . As equity shares carry voting rights with them , equity shareholders can take part in management .

2. Economical : Raising finance through debentures is less costly as compared to preferenceor equity capitalas interest payments on debenture is tax deductible expense but return on equity shares is paid after tax is paid .

3. Ideal for safe investors : debentures have fixed income as compared to equity shares as returns on debentures is fixed but returns on equity shares vary with profits

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