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प्रश्न
Financial management is based on three broad financial decisions. What are these?
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उत्तर
Financial management refers to the procurement, allocation and utilisation of funds. It deals with three main decisions :-
a) Procurement decisions :- To decide the source of capital that is from where the capital should be raised so as the overall cost of capital should be at its minimum.
b) Investment decisions (Allocation of funds) :- Where the available funds should be invested so as to ensure maximum return.
c) Dividend decision :- To decide the rate of dividend to be paid to the shareholders
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संबंधित प्रश्न
'Mission Coach Ltd.' is a large and creditworthy company manufacturing coaches for Indian Railways. It now wants to export these coaches to other countries and decides to invest in
new hi-tech machines. Since the investment is large, it requires long-term finance. It decides to raise funds by issuing equity shares. The issue of equity shares involves huge floatation cost. To meet the expenses of floatation cost, the company decides to tap the money market.
1) Name and explain the money-market instrument the company can use for the above
purpose
2) What is the duration for which the company can get funds through this instrument?
3) State any other purpose for which this instrument can be used.
Explain the following as factor affecting dividend decision:
Growth opportunities
Explain the following as factor affecting dividend decision:
Taxation policy
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
Give the meaning of ‘Investment’ and ‘Dividend’ decisions of financial management.
Explain the factors affecting the dividend decision.
| Ravi has joined as a finance manager at MTA Ltd. He had to arrange funds of rupees one crore for the company. The Chief Executive Officer of the company wants to arrange the funds by a public issue whereas the finance manager wants to have a mix of debt and equity as this will determine the overall cost of capital and the financial risk of the enterprise. |
- Identify and give the meaning of the financial decision suggested by the finance manager in the above case.
- State any three factors affecting the decision identified in (i) above.
What is the nature of debt in a debt-and-equity comparison?
Which statement about payment of dividends on equity is correct?
How does equity compare with debt regarding repayment of capital?
Which comparison of financial risk for debt and equity is correct?
How does debt normally affect ownership control?
What may be the effect of a fresh issue of equity on control?
What generally happens as the proportion of debt in total capital increases?
Which are examples of fixed operating costs?
Which set lists sources of finance considered in a financing decision?
Which sequence correctly orders the seven factors affecting financing decisions?
