Significance or importance of debentures can be highlighted as follows:
1. Source Of Finance
Debenture is a most suitable form of long term source of financing.
2. Less Costly
Debenture is less costly source of financing for the company. Cost of debenture is lower than the cost of equity.
3. Less Tax Burden
Debenture helps to minimize the tax burden of the firm because amount of interest is deducted from the income.
Earning per share can be maximized because of the benefit of financial leverage.
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5. Mobilization Of Fund
It helps to mobilize public savings and funds in the form of investment.
6. Minimum Risk
Investing in debentures involves less risk than other options of investment.
