Difference Between Debentures and Equity

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Today, we will simply learn about the main differences between the debentures and equity.

The differentiation to debentures and equity will also clear the main benefits of each instruments.

Debentures and Equity

Following are the differences between the debentures and equity:

Debentures

Equity

Debenture Instruments do not give ownership rights to it’s holders. Equity Instruments entitle the holders to own part of the business.
Interest is payable Dividend is payable
Interest is legal obligation to pay Dividend is not legally necessary
Debt holders get preference in case of dissolution of company Equity holders are paid only after all other obligations are met.
Interest not paid is carried forward Dividend cannot be carry forward.

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Gurpreet Saluja

Hi, I’am Managing Director at Gurpreet Saluja Financial Services where I help my investors choose right investment avenue to achieve their financial goals. I’m also a Value Investor and here I Write about Finance & Investing.

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