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प्रश्न
What is ‘Financial Risk?’ Why does it arise?
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उत्तर
Financial risk is a situation when a company is not able to meet its fixed financial charges. The fixed financial charges are the :-
- Interest that is to be paid on borrowed capital and
- Rate of dividend to be paid on preference capital.
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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:
Growth opportunities
Explain the following as factor affecting dividend decision:
Access to capital market
Explain the following as factor affecting 'financing decision'.
Level of fixed operating cost
Explain the following as factor affecting 'financing decision'.
Control consideration
| 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.
Besides the total amount of long-term finance required, what must a business identify?
Which set of outcomes is affected by a financing decision?
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?
What happens to debt’s interest and principal commitments when profits are inadequate?
How is interest treated while determining taxable profit?
Which expenses are examples of floatation costs?
How does lower cost affect the attractiveness of a source of finance?
What financing choice is supported by strong cash flows?
Which are examples of fixed operating costs?
Which financing source is favoured by a desire to retain control?
Which set lists sources of finance considered in a financing decision?
