Sources Of Finance For Joint Stock Company Flashcards
1
Q
What are shares?
A
Shares are the ownership securities and share capital represents ownership capital.
2
Q
Which shares are issued prior to preference shares and debentures?
A
Equity shares
3
Q
Why is there a no burden on earnings on equity shares?
A
Because dividend on such shares is payable only at discretion of management, subject to availability of adequate profits.
The company is under no obligation to pay a fixed rate of dividend on equity shares.
4
Q
Why are equity shares a source of strength?
A
A company with substantial equity shares commands prestige in the investment market.
