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प्रश्न
Explain the following as factor affecting 'financing decision'.
Control consideration
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उत्तर
Control consideration: A firm may prefer borrowed fund securities to meet the fund requirement as the existing shareholders tend to retain complete control of a business. On the other hand, a firm may prefer owner’s fund securities as they are ready to lose control of the business.
Retention of Control: Debt
Sharing the Control: Equity
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संबंधित प्रश्न
Vasvi was a student of Commerce in class XII. Her father was a farmer, who grew different varieties of wheat and was well versed about various aspects of wheat cultivation. He was also selected by the government for a pilot-project on wheat cultivation. As a project, she decided to study the feasibility of marketing good quality wheat at the reasonable price. Her father suggested to her to use the internet to gather customers’ views and opinions. She found that there was a huge demand for organic packed wheat. She knew that there were no pre-determined specifications in case of wheat, because of which it would be difficult to achieve uniformity in the output. To differentiate the product from its competitors, she gave it the name of ‘Mahan-organic wheat’ and classified it into three different varieties namely — Popular, Classic and Supreme, based on the quality. She felt that these names would help her in product differentiation.
Explain the three functions of marketing, with reference to the above paragraph
Explain the following as factor affecting dividend decision:
Stability of earnings
Explain the following as factor affecting dividend decision:
Cash flow position
Explain the following as factor affecting dividend decision:
Shareholder's preferences
Give the meaning of ‘Investment’ and ‘Dividend’ decisions of financial management.
What is ‘Financial Risk?’ Why does it arise?
| 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.
Identify the financial decision that is concerned with deciding how much of the profit earned by a company is to be distributed to shareholders and how much should be retained in the business. Also state any three factors affecting the identified decision.
What are shareholders’ funds?
What are retained earnings?
What is the nature of debt in a debt-and-equity comparison?
What is the nature of equity in a debt-and-equity comparison?
Which statement about payment of dividends on equity is correct?
Why is cheaper debt not automatically the best source of finance?
How does lower cost affect the attractiveness of a source of finance?
How does higher financial risk affect the suitability of taking on more debt?
What financing choice is supported by strong cash flows?
Which financing source is favoured by a desire to retain control?
