Differentiate between equity shares and preference shares. - Vidyadip

Question

Differentiate between equity shares and preference shares.

✓

Answer

The differences between equity shares and preference shares are:

S. No.	Basis	Equity Shares	Preference Shares
1.	Participation in Management	Full right to participate.	No right to participate.
2.	Sequence of Dividend	Dividend is paid last of all.	Preference is given in payment of dividend.
3.	Sequence of Refund of Capital	On winding up of the company, capital is refunded after preference shares.	Preference is given in refunding the capital.
4.	Refund of Capital During Lifetime	Not possible at all.	Capital can be refunded in case of redeemable preference shares.
5.	Permanency of Dividend	Dividend is uncertain as it fluctuates with the amount of divisible profits decision of board of directors.	Dividend is certain and fixed.

Need a full question paper?

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Start Generating Free

Explore more

More "6 Marks Question" from Sources of Business Finance→Sources of Business Finance — all question types→Business Studies STD 11 Commerce question papers→CBSE Board STD 11 Commerce question papers→CBSE Board question paper generator→

Similar questions

What is the difference between life, fire and marine insurance?

Itinerant traders have been an integral part of internal trade in India. Analyse the reasons for their survival in spite of competition from large scale retailers.

Distinguish between private companies and public companies.

Describe briefly different types of cooperative societies.

"The path of small scale industries is full of hurdles". Discuss.

What are business services? Briefly explain the various business services.

Rishabh, a brilliant student, lives in a remote district of Orissa and has done mechanical engineering. He has won a lottery of ₹ 10 lakhs. He wants to invest this money in some business opportunity. One of his friends suggested him to form a company. So he decided to manufacture tube lights and bulbs in his manufacturing unit and give jobs to unemployed youth in his village area. He has identified the business opportunity but is unaware about the other functions to be performed by him as a promoter of the company.
Explain the other five steps to be performed by him as a promoter of the company

State the types of life insurance policies.

Greentech Paints India has started preliminary work for expansion of water based paint and resin manufacturing capacity in their existing plant at Rishra in West Bengal and installation of a resin manufacturing plant in Goa with the amount available in the general reserves of the company. The Board of Directors of Greentech Paints India has decided to install a new water based paint plant with a capacity of about 1 lakh tonnes per annum in South India at an estimated cost of rupees five crore, but are unable to decide whether to issue equity shares or debentures for this purpose.
As a finance manager of the company you are required to advise the directors to raise money through issue of equity shares debentures for the aforesaid purpose.

What is meant by ‘partner by estoppel’? Explain.