September 29, 2023

From the above example, we can see that preferred stock and bonds are dividend & interest-bearing funds. Equity holders (i.e., ordinary shareholders) are paid a dividend that varies each year with the volume of profits made. For example, agricultural companies often need to borrow money on short-term basis as the industry is affected by seasonal…

Such investments require urgent action and shareholders may not be in a position to raise the required capital, due to the time limitations. If the business is on good terms with its creditors, it may obtain large amounts of capital quickly as long as it meets the loan requirements. For example, a gearing ratio of…