Financial magmt

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vijayitha (Querist)
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15 January 2012 hi what is the risk involved in equity and debentures? which out of these two is better??

is EBIT gross profit or netprofit and why??

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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15 January 2012 Investment in Equity is riskier than in Debentures. Returns are uncertain and depends upon the profitability of the company. The only relief to the share holder in case of an equity can be said, is the limited liability... i.e. to the extent of amount unpaid on shares.
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Debentures assures regular and fixed return. Ups and downs in share market have no effect on it. It is less riskier than the shares.
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It depends upon the person who is exercising the option. If he is young, risk taking man, ambitious and desires high return, he should go for equity of good and prospective companies.
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EBIT -mean Earnig before Interest and Tax.
It is not gross profit. It is nearer to the net profit. If You deduct Interest and Tax from Net Profit you will get EBIT.
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