Difference between debtcapital and equity capital, Financial Management

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Difference between Debtcapital and Equity capital

Debtcapital comprises:

  • Long-term loans (debentures, loan stock etc.)
  • Preference share capital
  • May also include bank overdrafts, but not necessarily

All the above are termed as interest bearingcapital.

Equity capital comprises:

  • Ordinary share capital
  • Share premium
  • Retained profits or losses
  • Any reserves

All the above are termed as shareholder funds

 

 


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