Give the difference between equity shares and preference shares.

Solution

Distinction between Equity shares and Preference shares :
Equity shares ;
1. Preferential Right : Payment of equity dividend is made after payment of preference dividend.

2. Convertability ; Equity shares cannot be converted.

3. Voting Rights : Equity shareholders enjoy voting rights in general meeting.

4. Premium on Redemption : Not receive premium on redemption.

5. Redeemability ; Equity shares are not redeemable.

6. Arrears of dividend : Arrears of dividend cannot accumulate.
Preference shares :
1. Preferential Right :Payment of preference dividend is made before payment of equity dividend.

2. Convertability : Preference shares may be converted.

3. Voting Rights : Preference shareholders donot have any voting right except at meeting of preference shareholders.

4. Premium on Redemption : Right to receive premium on redemption.

5. Redeemability : Preference shares are redeemable.

6. Arrears of dividend : Arrears of dividend may accumulate.

Some More Questions From Sources of Business Finance Chapter

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Sources Of Business Finance

Give the difference between equity shares and preference shares.

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