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प्रश्न
Explain the following as factor affecting 'financing decision'.
Cash flow position of the business
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उत्तर
Cash flow position of the business: Debt should be opted by the company only if it has a strong cash flow position. This is because cash would be required to repay the principal along with the interest rate on the debt.
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संबंधित प्रश्न
Explain the following as factor affecting dividend decision:
Cash flow position
Explain the following as factor affecting dividend decision:
Legal constraints
Explain the following as factor affecting 'financing decision'.
Control consideration
Explain the following as factor affecting 'financing decision'.
State of capital markets
Give the meaning of ‘Investment’ and ‘Dividend’ decisions of financial management.
Financial management is based on three broad financial decisions. What are these?
| 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 must a business determine about its total finance requirement when making a financing decision?
What must a business decide about each available source of finance?
What is the nature of debt in a debt-and-equity comparison?
What may be the effect of a fresh issue of equity on control?
Which statement describes the general cost of debt compared with equity?
What happens to debt’s interest and principal commitments when profits are inadequate?
How does higher financial risk affect the suitability of taking on more debt?
What financing choice is supported by strong cash flows?
Which are examples of fixed operating costs?
What financing choice do high fixed operating costs generally favour?
Which sequence correctly orders the seven factors affecting financing decisions?
