Accounting / July 19, 2018 / Holly Mercer
This costing system is used in target costing, product costing, product line profitability analysis, customer profitability analysis, and service pricing. It is also hugely popular since organizations can develop a much better corporate focus and strategy if costs are better grasped.
If the stock does poorly, however, the investor won’t be able to convert the security to stock and will only have the yield to show for his or her investment. But unlike stock, convertible bonds can only fall so far – provide the issuing company remains solvent – since they have a specific maturity date at which time investors will receive their principal. In this sense, convertible bonds have more limited downside than common stocks.
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