हिंदी

Which of the following is not a factor affecting capital structure of a company? - Business Studies

Advertisements
Advertisements

प्रश्न

Which of the following is not a factor affecting capital structure of a company?

विकल्प

  • Cost of Debt

  • Growth Opportunities

  • Cash Flow Position

  • interest Coverage Ratio

MCQ
Advertisements

उत्तर

Growth Opportunities

Explanation:

Growth opportunities do not influence a company's capital structure.

shaalaa.com
  क्या इस प्रश्न या उत्तर में कोई त्रुटि है?
2022-2023 (March) Delhi Set 1

वीडियो ट्यूटोरियलVIEW ALL [2]

संबंधित प्रश्न

Explain briefly any four factors which affect the choice of capital structure of a company.


Veronica Ltd., a reputed truck manufacturing company, needs rupees twenty crores as additional capital to expand its business. Mr Alind Jindal, the CEO of the company, wants to raise funds through equity. The Finance Manager, Mr Nikhil Sachdeva, suggests that the existing shareholders be offered the privilege to subscribe to the new issue of shares as per the terms and conditions of the company which was agreed by Mr Alind Jindal.

Name the method through which the company decided to raise additional capital.


Explain how 'cost of debt' affects the choice of capital structure of a company


Explain the following as factors affecting the choice of capital structure:

Cost of equity


Explain the following as factors affecting the choice of capital structure:

Return on Investment


Explain the following as factors affecting the choice of capital structure:

Flexibility


Write the external factors influencing capital structure. 


Write notes on Capital structure and its components. 


Explain the term ‘Trading on Equity’? Why, when and how it can be used by company.


Write the internal factors influencing Capital Structure.


Answer the following question.
'Determining the overall cost of capital and the financial risk of the enterprise depends upon various factors.' Explain any six such factors.


Read the following text and answer the following questions on the basis of the same:

Mr. A. Bose is running a successful business. Mr. Bose is the owner of R. K. Cement Ltd. Mr. Bose decided to expand his business by acquiring a Steel Factory. This required an investment of Rs. 60 crores. To seek advice in this matter, he called his financial advisor Mr. T. Ghosh who advised him about the judicious mix of equity (40%) and Debt (60%). Employ more of cheaper debt may enhance the EPS. Mr. Ghosh also suggested him to take loan from a financial institution as the cost of raising funds from financial institutions is low. Though this will increase the financial risk but will also raise the return to equity shareholders. He also apprised him that issue of debt will not dilute the control of equity shareholders. At the same time, the interest on loan is a tax deductible expense for computation of tax liability. After due deliberations with Mr. Ghosh, Mr. Bose decided to raise funds from a financial institution.

Identify the concept of Financial Management as advised by Mr. Ghosh in the above situation.


______ refers to a situation when a company is not able to meet its fixed financial charges.


Which component of capital structure determines the overall financial risk?


Tapan, after leaving his job, wanted to start a Private Limited Company with his son. His son was keen that the company may start manufacturing of Mobile-phones with some unique features. However, Tapan felt that the mobile phones are prone to quick obsolescence and a heavy fixed capital investment would be required regularly in this business. Therefore, he convinced his son to start a furniture business. ______ factor affecting fixed capital  requirements is making Tapan choose furniture business over mobile phone. 


State any four factors affecting the decision that determines the overall capital and the financial risk of the enterprise.


State any three factors determining the choice of an appropriate capital structure of a company.


The Board of directors of Medex Pharma Ltd. decided to issue debentures worth ₹ 40 lakhs in order to finance a major Research and Development project. This would increase the Debt Equity ratio from 1:1 to 2:1.However, at the same time it would increase the Earnings per share.

The reason that will justify the above situation is ______.


Share
Notifications

Englishहिंदीमराठी


      Forgot password?
Use app×