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प्रश्न
Explain the following as factors affecting the requirements of fixed capital:
Technology upgradation
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उत्तर
Technology upgradation: Due to changes in technology or it becoming obsolete over time, companies require a large amount of investment in fixed capital. For example, certain machinery becomes obsolete very soon compared to other assets such as furniture. Therefore, a larger fixed capital is required for upgradation.
Faster upgradation ⇒ Higher investment in fixed assets
Slower upgradation ⇒ Lower investment in fixed assets
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संबंधित प्रश्न
Answer the following question:
The Return on Investment (ROI) of a company ranges between 10 - 12% for the past three years. To finance its future fixed capital needs, it has the following options for borrowing debt:
Option ‘A’: Rate of interest 9%
Option ‘B’: Rate of interest 13%
Which source of debt, ‘Option A’ or ‘Option B’, is better? Give reasons in support of your answer. Also, state the concept being used in taking the decision.
Explain briefly any four factors that affect the working capital requirement of a company.
Explain the following as factors affecting the requirement of working capital:
The credit allowed and availed
Amrit is running a ‘transport service’ and earning good returns by providing this service to industries. Giving reason, state whether the working capital requirement of the firm will be ‘less’ or ‘more’.
How does working capital affect both the liquidity as well as profitability of a business?
What is working capital? Discuss five important determinants of working capital requirement?
Write a word or a term or a phrase which can substitute the following statement :
The difference between current assets and current liabilities.
What is meant by capital gearing ratio?
Why is working capital also known as circulating capital?
Higher working capital usually results in :
A fixed asset should be financed through
Current assets of a business firm should be financed through
______ involve identifying various sources of funds and deciding the best combination for raising the funds.
______ decision involves the decision regarding the distribution of profit or surplus of the company.
Assertion (A): A commercial bill is a bill of exchange used to finance the working capital requirements of business firms.
Reason (R): Commercial bill is a short-term, negotiable, self-liquidating instrument which is used to finance the credit sales of firms.
Fixed capital is financed through:
Dhaval Acharya, after acquiring a bachelor’s degree in Hotel Management joined his father’s chain of vegetarian restaurants in Ahmednagar. Being young and enterprising, he suggested his father to add a new section of vegetarian bakery items which required an investment of ₹ 5 crores. His father Mr. Aariketh Acharya suggested him to take the decision with caution and understood everything comprehensively as bad decision may damage the financial fortune of business.
Identify the decision suggested by Mr. Aariketh Acharya. State by giving any three reasons as to why he must have advised his son to take decision with caution.
