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प्रश्न
Explain the following as factor affecting 'financing decision'.
Level of fixed operating cost
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उत्तर
Level of fixed operating cost: Fixed operating cost includes salaries, rent, insurance payouts etc. If a firm has low fixed operational cost, it can opt for the debt which involves fixed financing cost in the form of interest obligations, thereby increasing fixed cost.
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संबंधित प्रश्न
Explain the following as factor affecting dividend decision:
Shareholder's preferences
Explain the following as factor affecting dividend decision:
Legal constraints
Explain the following as factor affecting 'financing decision'.
Cash flow position of the business
Financial management is based on three broad financial decisions. What are these?
| Ananta Ltd. is a company dealing in ready-made garments for the last many years. Recently the profit of the company has started increasing. The finance manager decided to retain the profit instead of distributing it among shareholders. |
- Identify and state the financial decision taken by the finance manager in the above case.
- State any three factors affecting the decision identified in (i) above.
What must a business determine about its total finance requirement when making a financing decision?
What are shareholders’ funds?
What are retained earnings?
What combination must a firm select when choosing between debt and equity?
What is the nature of debt in a debt-and-equity comparison?
Which payment is compulsory under the borrowing terms?
Which comparison of financial risk for debt and equity is correct?
What may be the effect of a fresh issue of equity on control?
Which statement describes the general cost of debt compared with equity?
Why is cheaper debt not automatically the best source of finance?
What is financial risk?
What happens to debt’s interest and principal commitments when profits are inadequate?
Which statement about the cost of sources of finance is correct?
How does a higher floatation cost affect a financing source?
