What is the difference between shares and debentures as sources of finance?

      

List the difference between shares and debentures as sources of finance.

  

Answers


Maurice
(i) A share is a unit of capital in a company while a debenture is a unit of a loan advanced to a public limited company.

(ii) Shareholders are owners of a company while debenture holders are creditors to the company.

(iii) Shares earn dividends from profits made while debentures earn interest which is an expense to the company.

(iv) Dividends are only paid when profits are made while interest on debentures must be paid with or without profit.

(v) Shareholders have voting rights whereas debenture holders have no voting rights.

(vi) A share is a capital investment that does not require security whereas debentures may or may not require security.

(vii) At dissolution shares are paid last while debentures have first priority payments during dissolution.
maurice.mutuku answered the question on August 16, 2017 at 11:29


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