- As soon as you buy shares in company you become partial owner in that company,whereas debenture holder is creditor of company.
- Shareholders earn their dividend only when company earns profit, whereas interest on debentures must be paid, didn’t matter company is making profit or not.
- Investment in shares is like unsecured investment whereas debenture are generally secured through assets of company.
- Shareholders are authorized to take part in general meeting of company whereas debenture holder have no right to attend, unless any decision affection their interest is taken.
- Through election of board of directors shareholders control affairs of the company. Debenture holders not concern about management and control of the company.
- During winding up of a company debenture holders have better claim over shareholders. Debenture holder must be paid before shareholders.
Important ratios for stock analysis PE ratio:- PE ratio also known as the price to earning ratio and very famous between the investors. Investors use this ratio with other ratios or data to find out undervalued stocks. Read more Important ratios for stock analysis Earning per share:- In simple meaning it means “distribution of company’s profit between each shares” it can be used as the indicator for determining company’s profitability. It is best to use PE ratio and Earning per share comparatively. Return on Assets:- Is company using its assets effectively to generate income, yes or not? This ratio tells us the truth. This ratio gives us idea about management efficiency or capability to run company profitably. It compares company’s earnings as compare to its assets Dividend payout ratio:- It means “amount of dividends paid to stockholders relative to the amount of total net income of a company” Dividend payout ratio = Dividends / Net Income. Retention Ratio:- What c