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Explain the following as factor affecting dividend decision:
Shareholder's preferences
Concept: Financial Decisions - Financing and Dividend
Explain the following as factor affecting dividend decision:
Access to capital market
Concept: Financial Decisions - Financing and Dividend
Explain the following as factor affecting dividend decision:
Legal constraints
Concept: Financial Decisions - Financing and Dividend
Explain the following as factor affecting the requirements of working capital:
Operating efficiency
Concept: Factors Affecting Fixed and Working Capital Requirements
What is meant by Financial Risk?
Concept: Concept of Financial Planning
Answer the following question.
State the objective of ' Financial Management '.
Concept: Concept of Financial Management
Give the meaning of 'Investment' and 'Financing' decisions of financial management.
Concept: Financial decisions - investment
Explain the following as factors affecting the requirements of working capital:
Scale of operations
Concept: Concept of Fixed and Working Capital
Explain the following as factor affecting the choice of capital structure:
Floatation costs
Concept: Concept of Capital Structure
Give the meaning of ‘Investment’ and ‘Dividend’ decisions of financial management.
Concept: Financial Decisions - Financing and Dividend
| 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.
Concept: Financial Decisions - Financing and Dividend
| 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.
Concept: Financial Decisions - Financing and Dividend
|
NB Ltd. is India's largest manufacturer of cement. Its operations are spread throughout the country with 17 modern cement factories. It has a workforce of 9,000 people. Since its inception, the company has been a trendsetter in the cement industry. The company is planning to grow in the long run and wants to double its capacity in the next 3 years. For this, the Finance Manager has to decide about the quantum of finance to be raised from various long-term sources. For this, he needs to identify various available sources of funds and the proportion of funds from each source. |
- Identify the financial decision to be taken by the Finance Manager.
- State any four factors which would affect the decision identified in (i) above.
Concept: Financial Decisions - Financing and Dividend
| Myra Ltd. manufacturing televisions is planning to expand its business and requires ₹250 crores for the same. A number of projects are available for the company to invest in and each project has to be evaluated carefully. The Finance Manager of the company has assessed the projects in terms of the rate of return from each project and wanted to select the one with the higher rate of return. But before selecting the project he has to take into consideration other factors also. |
- Identify and state the financial decision discussed in the above paragraph.
- Explain the other factors that the Finance Manager should consider before selecting the project.
Concept: Financial decisions - investment
When the proportion of debt and equity is such that it results in an increase in the value of equity share the ______ is/are said to be optimal.
Concept: Concept of Capital Structure
‘Zenith Mall’ is a famous shopping mall in Mumbai, owned by ‘Pinnacle Group'. It is very popular for its international and national brands of fashionable clothes, restaurants, cinema halls and food courts.
The management of Pinnacle Group has decided to open a new branch of the mall in Pune. This decision was very crucial for the management as it involves huge amounts.
- Identify and state the financial decision involved in the above case.
- State any two factors affecting the decision identified in (i) above.
Concept: Financial decisions - investment
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. |
Concept: Factors Affecting Fixed and Working Capital Requirements
______ refers to the increase in profit earned by the equity shareholders due to the presence of fixed financial charges like interest.
Concept: Concept of Capital Structure
Which of the following is not a factor affecting capital structure of a company?
Concept: Concept of Capital Structure
| Harish is working as a finance manager in 'Kozee Softwares Ltd.' He has been awarded “Best employee of the year Award’ because of his foresightedness. He always aims at smooth operations of all the financial activities by focusing on fund requirements and their availability in the light of financial decisions. He takes into consideration the growth, performance, investments and requirement of funds for a given period so that financial resources are not left idle and don't unnecessarily add to the cost. |
By doing all this Harish strives to achieve the two main objectives of an important concept of financial management. Identify the concept and explain its two objectives.
Concept: Concept of Financial Planning
