Identify and discuss the merits and limitations of the source of finance

cbse
sources-of-business

#1

Identify and discuss the merits and limitations of the source of finance in which holders are entitled
to receive interest and do hot have right to vote.


#2

Debentures, it refers to the loan to the company by the debenture holders on which they receive good amount of interest.
Merits
(i) Debentures offer an opportunity to the company to trade on equity. .
(ii) This provides steady and continuous income to the investors.
(iii) Company’s enjoy the tax benefits after issuing debentures.
Limitations
(i) Debenture holders cannot participate in the matters of the company.
(ii) It gives company a burden of paying a fixed interest to the holders.