Is preference share a debt or equity?

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I know that ordinary shares is part of the equity but what about the preference shares? Is it equity or debt?

2 Answers

score 0 · Answer 1 · 2012-12-02T22:51:42+00:00

Preference shares can be both equity and debt. If the shares are redeemable, then it is debt (something like a bond).If the shares are not redeemable, then the preference shares are part of the equity.

score 0 · Answer 2 · 2013-05-07T23:18:47+00:00

IF the preference share is irredeemable then it’s equity. If the preference shares are redeemable , then they are considered as debt and actually, the dividend paid is considered as finance cost and it’s included on the income statement.