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If they mention prior charge capital divided by equity we can use preference shares with debt
If they don’t mention about prior charge what we will do
Or they only say debt/equity
Here we inlude preference share with equity side?Yes if the term “prior charge capital” is mentioned, preference shares should be included with debt. However, if the term “prior charge” is not mentioned and the formula specifies “debt/equity,” then preference shares should be included on the equity side.
In summary:
Prior charge capital/equity: Include preference shares with debt.
Debt/equity: Include preference shares with equity.
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