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Business Studies 4 Marks Question

Financial Management · CBSE STD 12 Commerce (CBSE - English Medium). 2 questions.

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4 Marks Question

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Question 14 Marks
Tata International Ltd. earned a net profit of ₹ 50 crores. Ankit, the finance manager of Tata International Ltd. wants to decide how to appropriate these profits. Identify the decision that Ankit will have to take and also discuss any five factors which help him in taking this decision.
Answer
Dividend decisionFactors affecting dividend decision: (any five)(i) Amount of earnings(ii) Stability of earnings(iii) Stability of dividend(iv) Growth opportunities(v) Cash flow position(vi) Shareholders preference(vii) Taxation policy(viii) Stock market reaction(ix) Access to capital market(x) Legal constraints(xi) Contractual constraints.
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Question 24 Marks
PVR is a renowned multiplex operators in India. It owns 254 screens in 52 properties at 24 locations in the country. Considering the fact that there is more growing trend among the people to spend more of their disposable income on entertainment, company planned to add more screen at existing locations and start at new locations also; they also plan to add food chain also at their locations. The company planned to float equity shares in market to raise the desired capital. The issue was fully subscribed and paid. Over the years the sale and the profit of the company have increased tremendously and it has been declaring higher dividend and the market price of its share has increased manifolds. (a) Name the different kinds of financial decisions taken by PVR Ltd. by quoting lines from para. (b) Do you think the financial management team of the company has been able to achieve its prime objectives? Why or why not?
Answer
(a) The different kinds of financial decisions taken by company are
(1) Investment decision lines "company plan to add more screen........ food chain.
(2) Financing decision lines "The 10 planned to float equity shares..... capital." (3) Dividend Decision, "It has been declining higher dividend."
(b) Yes as price of its share has increased manifolds as prime objective of financial management is maximising the wealth of equity share holders."
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4 Marks Question - Business Studies STD 12 Commerce Questions - Vidyadip