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प्रश्न
Distinguish between cumulative and non-cumulative preference shares.
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उत्तर
- Cumulative Preference Shares: When dividends go on accumulating if they are not paid, preference shares are said to be cumulative. If, for some reason, dividends in a particular year are not paid, they will be carried forward to the next year. Such unpaid dividends go on accumulating and become payable out of profits in subsequent years. Any dividend can be paid to equity shareholders only after the payment of such accumulated dividends on preference shares. Preference shares are always cumulative unless otherwise stated.
- Non-cumulative Preference Shares: On this type of preference shares, dividends, if unpaid, are not carried forward or do not accumulate. If the company is unable to pay dividends in a particular year, the shareholder’s right to dividends in respect of that year is lost forever.
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संबंधित प्रश्न
What are Preference Shares?
The term 'redeemable' is used for ______.
Which of the following is also known as hybrid financing?
Preference shares may be ______.
Distinguish between equity shares and preference shares.
Describe the different types of preference shares.
The directors of a company have decided to modernise the plants and machinery at an estimated cost of Rs. one crore, but could not decide whether to issue preference shares or debentures for this purpose. As finance manager of the company, advise the directors whether to issue preference shares or debentures in the interest of the company.
Preference shares carry preferential rights for payment of dividend and repayment of capital.
Discuss the importance of preference shares as sources of long-term finance.
Explain the disadvantages of preference shares.
