why is equity share capital called risk capital ? Explain any two advantages and limitations of issuing equity shares to raise long term finance .
Equity Share Capital is called as risk capital as equity shareholders have a claim over the residual proceeds of the company. In other words, in the event of winding up they are the last to be paid off after settling the claims of creditors and other external liabilities. In case the funds are insufficient to repay or settle external liabilities, equity shareholders are not paid off any thing instead the uncalled amount may be called up from the them.
Advantages and limitations of issuing equity shares to raise long term finance are already covered in our revision notes of Business Studies XI. Follow the given link and scroll down to the topic 'Equity shares' to view the same.
https://www.meritnation.com/cbse/class11-commerce/revision-notes/business-studies/business-studies/sources-of-business-finance/1161_5371
Advantages and limitations of issuing equity shares to raise long term finance are already covered in our revision notes of Business Studies XI. Follow the given link and scroll down to the topic 'Equity shares' to view the same.
https://www.meritnation.com/cbse/class11-commerce/revision-notes/business-studies/business-studies/sources-of-business-finance/1161_5371