Why convertibles might be an attractive source, Financial Accounting

Q. Why convertibles might be an attractive source of finance for companies?

- Convertibles is able to provide immediate finance at lower cost since the conversion option effectively reduces the interest rates payable.

- They represent attractive investments to investors as they are effectively debt risks for future equity benefits. Therefore finance is relatively easily raised.

- Must the company's assumption regarding the likelihood of conversion prove true then there is no problem of establishing a large sinking fund for the redemption of the debentures.

- Convertibles permit for higher gearing levels than would otherwise be the case with straight debt (interest costs are potentially lower with convertibles).

Posted Date: 7/11/2013 8:18:38 AM | Location : United States

Related Discussions:- Why convertibles might be an attractive source, Assignment Help, Ask Question on Why convertibles might be an attractive source, Get Answer, Expert's Help, Why convertibles might be an attractive source Discussions

Write discussion on Why convertibles might be an attractive source
Your posts are moderated
Related Questions
Absorption costing is a cost accounting method that tries to charge all direct costs and all production costs of an organization to specific units of pr

discuss the importance of state accounting to an effective fiscal administration

wrote check to purchase law books for 2500 what 2 accounts

Profit is not cash flow: Adequate cash is essential to keep business running. Inadequate cash increases the risk of not being able to meet current obligations as and when the

Illustration of marked up by an additional amount E Limited sent goods to its branch in Thika invoiced at selling price, which was cost plus 505 of cost.  On 1st July 20X2, the

RETAINED PROFITS BROUGHT FORWARD If we recall from the consolidated balance sheet, the group-retained profits should be made up of the holding companies retained profit plus the

What is Comparability This quality would enable users to identify changes in the business over time (for instance, trend in sales revenue over the past five years). It wou

The following costs were incurred in 2010 in the design and construction of a new office building over a nine-month period during 2010: Requirement Calculate the amount

Cherry Ltd has the following segment information from the consolidated financial statements for the years ended 31 December 2011 and 2012: Operating segments C V I N$ N$ N$ Sales

Illustration of Corporate tax During the year ended31/12/2003, A Ltd. had estimated the corporation tax for the year to be £100,000. The amount was still outstanding as at 31/1