Question

ABC Ltd. Is an auto spare parts manufacturing company. The company has issued equity and preference shares to meet its requirement. Other sources of finance have not been considered at all. This has resulted in payment of large amount of taxes to government as divident on shares is not deducted from income of the company for the purpose of tax calculation.
(a) State the source of finance which can give benefit saving.
(b) State other factors which are kept in mine selecting source of finance.

Answer 1

(a) Borrowed fund, i.e., debentures, loan, public deposits, ect., as interest on these is treated as a expense.