Question

Debenture is a part of owned capital.

Hint:

Debentures = borrowed capital; shareholders = owned capital.

Answer 1

Owned capital refers to funds provided by shareholders such as share capital and reserves. Debentures, however, are borrowed funds raised from creditors. Debentureholders receive fixed interest and repayment of principal, but they do not hold ownership rights. They are lenders and not owners. Therefore, debentures form part of borrowed capital, not owned capital. Companies must repay debentures regardless of profit, which distinguishes them further from owner-based funds.