Question

What are the two merits of issuing equity shares?

What are the two merits of issuing equity capital?

Answer 1

1. Permanent Capital: Equity shares provide permanent capital to the company, as they do not have to be repaid during the lifetime of the business.
2. No Fixed Obligation: There is no compulsory payment of dividend on equity shares, so the company is not burdened with fixed costs like interest.