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प्रश्न
Ratan Ltd. needs to raise funds from the financial market and, hence, considers issuing equity shares. State any four reasons to explain why this source of raising funds is considered by the company.
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उत्तर
- No fixed burden: Equity shares do not burden the company as dividends are based on profit availability and board of directors' intentions. The corporation is not required to pay dividends to equity shareholders, even if it is profitable.
- Permanent Capital: Equity share capital is considered long-term or permanent capital because a firm is not compelled to repay it during its lifetime. It is only reimbursed to shareholders when the company is wound up.
- Risk Capital: Equity capital is referred to as risk capital. In difficult times, a corporation can trade on equity to mitigate the risk associated with equity capital.
- No charge on assets: Equity shares do not generate a levy on the company's assets. A firm is free to use its assets to raise financing.
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संबंधित प्रश्न
Identify the factor affecting fixed capital requirements of Fashion-ate Pvt. Ltd.
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Identify the factor affecting fixed capital requirements which made Rizul Bhattacharya to choose furniture business over mobile phones.
Answer the following question.
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A state with reason whether the working capital requirements of ‘Reliable Transport Services’ will be high or low.
Explain the following as factor affecting the requirements of working capital:
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State any three factors that determine the requirement of fixed capital of a company.
Match the factors affecting fixed capital requirements given in Column - I with their explanations given in Column - II:
| Column - I | Column - II | ||
| (A) | Nature of Business | (i) | A trading organisation needs lower investments in fixed assets as compared to a manufacturing organisation. |
| (B) | Technology upgradation | (iii) | A textile manufacturing company is installing a cement manufacturing plant and thus its investments in fixed assets is increasing. |
| (C) | Diversification | (iii) | A capital-intensive organisation requires higher investments in fixed assets as compared to labour- intensive organisation. |
| (D) | Choice of Technique | (iv) | Mobile phones became obsolete faster and are replaced much sooner than furniture or many other assets. Hence, these type of businesses require more fixed capital. |
