Why do companies make premium issues?

A company's aim is to raise money and simultaneously serve the equity capital. As far as accounting is concerned, premium is credited to reserves and surplus and it does not increase the equity. Therefore, a company which raises Rs.100 crore by way of shares say at a premium of Rs.90 per share increases its equity by only Rs.10 crore, which is easier to serve with an investment of Rs.100 crore. Thus, the companies seek to make premium issues. A premium issue can increase the book value without decreasing the EPS. In a buoyant stock market when good shares trade at very high prices, companies realize that it's easy to command a high premium.

common stock (and sometimes preferred stock) issued and paid plus capital surplus represent the total amount actually paid by investors for shares when issued (assuming no subsequent adjustments or changes).

__________________________________________________________

Want to get-on Google's first page and loads of traffic to your website? Hire a SEO Specialist from Ocean Groups [url= https://oceangroups.org/]seo pecialist [/url]

The unpleasant reality about “Return of Premium in Term Insurance Plan”

What is a Term Insurance Plan?

Term Plan Life Insurance is a plan in which a person takes a life cover and pays a premium for the period of cover. The premium is usually paid annually, however other options as half-yearly and quarterly premium are also available.

https://holisticinvestment.in/blog/return-of-premium-term-insurance-plan/

Regards

Ramalingam K, MBA, CFP,

Director and Chief Financial Planner,

Holistic Investment Planners

“Best Performing Financial Advisor Award” Winners from CNBC TV18

www.holisticinvestment.in