Business Studies 1 Marks Question

When is financial leverage favourable?

How do rising prices affect the requirement of working capital of an organisation?

Avik is the finance manager of Mars Ltd. In the current year, the company earned high profit. However, Avik thinks that it is better to declare smaller dividend as he is unsure about the earning potential of the company in the coming years.Avik's choice of dividend decision is based on which of the factor that affect it?

Give two factors affecting investment decision.

Give two factors affecting dividend decision.

Give two factors affecting financing decision.

What is the other name of a long term investment decision?

What is financial risk?

How does control of existing shareholders affect financing decisions?

How do growth opportunities affect Dividend Decision?

What is meant by gross working capital and net working capital?

How is return on investment computed?

How is interest coverage ratio computed?

Why is dividend decision called residual decision?

What is the link between operating cycle and working capital?

State steps involved in financial planning.

Enumerate three important decisions taken in financial management.

State the objective of financial management.

Satnam Singh wons a fruit orchit in Shimla where finest quality of apples are grown. He plans to start 15 juice stations in different localities in Shimla, Chandigarh, Solan, etc., in partnership with his friend Gurpreet Singh. Instead of buying he plans to take shops on rent. He needs money for other inputs.
Identify any explain two factors affecting fixed capital requirement of Satnam's business discussed in above para by quoting the lines.

Amit is running an 'Advertising agency' and earning a lot by providing this service to big industries. State whether the working capital requirement of the firm will be 'less' or 'more'. Give reason in support of your answer.

What is the another name for long term investment decision?

In case of high fixed operating cost, company should prefer debt or equity?

What determines overall financial risk?

What is the cost of raising funds called?

What is favourable financial leverage?

What is considered the cheapest source of finance?

Name types of capital which are part of capital structure.

Canara Bank wants to open a new branch of his bank. What is this decision called?

Jai Bharat Company Ltd. is an auto part supplier company in Guru Gram, Haryana. Its business is spread over several cities. The CEO of company wants to open a factory in Gujarat near Tata Motors Ltd. but due to recession for the last two years, its business is facing slow down. Company needs capital. Rakesh Gupta is CA and financial advisor of the company. He opines that during recession profit falls and investors prefer to invest in debentures to earn fixed income. Therefore, the company should issue debentures.
In this paragraph, which factor affecting financing decision has been highlighted? Explain state of capital market.

'REI Agro Food Ltd. is a famous multinational company. Mr. S.K. Nagi is its finance manager. He is making efforts to increase the market value of capital invested by the equity shareholders. He already knew it could be possible only when price of the shares increases and price of shares increase only if financing, investment and dividend decisions are taken optimally. He did the same and achieved success.Which objective of financial management has been referred here? Explain.

"Tax benefits is available only in case of payment of interest and not on the payment of preference dividend." Why?

"During annual general meeting of Prakash Ltd. CEO, Mr. Rajnesh put the expansion plan for the coming year before shareholders and asked for suitable source of finance to finance manager. Finance manager Mr. Kant proposed issue of debentures than equity with a plan that they can be paid back whenever requirement of funds is over."In the above paragraph, which component affecting financing decision has been highlighted? Explain the component.

Name the factor due to which a petro chemical company requires much higher investment in fixed capital than an information technology company. However both may generate same amount of revenue. Explain any two factors affecting fixed capital requirement.

Pankaj is engaged in Warehousing Business. Identify the working capital requirements of Pankaj stating the reason in support of your answer. Pankaj is also planning to start his Transport business.Explain any two factors that will affect his fixed capital requirements.

Dabur India has decided to increase credit limit and duration of credit to its customers to boost its sales. Name the type of decision involved.

HCL Company's finance manager has decided to retain its entire profit to meet financial requirement for its growth. Name the type of decision involved.