Advertisements
Advertisements
Question
Study the following case/situation and express your opinion.
A company is planning to enhance it's production capacity and is evaluating the possibility of purchasing new machinery whose cost is 2 crore or has alternative of machinery available on lease basis.
- What type of asset is machinery?
- Capital used for purchase of machinery is fixed capital or working capital?
- Does the size of a business determine the fixed capital requirement?
Advertisements
Solution
- Machinery is fixed asset since it is used in business for longer time period.
- The capital used for purchase of machinery is fixed capital.
- Yes, size of a business determines the fixed capital requirement. When business operations are carried out on a large scale, it will have higher fixed capital requirement as most of the production processes are based on automatic machines and equipment.
APPEARS IN
RELATED QUESTIONS
Match the correct pairs:
| Group “A” | Group “B” | ||
| 1 | Financial planning | a. | Dividend |
| 2 | Public deposit | b. | Less applications than expected |
| 3 | Private placement | c | Owned capital |
| 4 | Secured debentures | d. | Advance programming of the financial plan |
| 5 | Return on share | e. | Bonus |
| f. | Issuing shares without inviting the public for subscription |
||
| g. | Maximum 7 years | ||
| h. | Security about repayment | ||
| i. | Maximum 36 months | ||
| j. | Management of business activities |
Company has to pay ______ to government.
Write a word or a term or a phrase which can substitute the following statement.
A key determinant of success of any business function.
Business firm gives green signal to the project only when it is profitable.
Find the odd one.
Complete the sentence.
When there is boom in economy, sales will ______
Complete the sentence.
During recession period sales will ______
Answer in one sentence.
Define corporate finance.
Correct the underlined word and rewrite the following sentence.
When there is recession in economy sales will increase.
What is corporate finance and state two decisions which are the basis of corporate finance?
Discuss the importance of corporate finance.
Select the correct option from the bracket and complete the table:
(Funds for long-term, Rights issue, 36 months, Deploy funds in systematic manner, Charge on tangible assets)
| Group 'A' | Group 'B' | ||
| (a) | Investment decision | (1) | ____________ |
| (b) | ____________ | (2) | Shares offered to existing equity shareholders |
| (c) | Secured deposits | (3) | ____________ |
| (d) | ____________ | (4) | Maximum period of deposits |
| (e) | Capital market | (5) | ____________ |
Business firm gives green signal to the project only when it is profitable.
Business firm gives green signal to the project only when it is profitable.
Business firm gives green signal to the project only when it is profitable.
Business firm gives green signal to the project only when it is profitable.
Liberal credit policy creates a problem of bad debts.
Business firm gives green signal to the project only when it is profitable.
