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Explain the Following as Factor Affecting 'Financing Decision'. Control Consideration - CBSE (Commerce) Class 12 - Business Studies

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Question

Explain the following as factor affecting 'financing decision'.

Control consideration

Solution

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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Solution Explain the Following as Factor Affecting 'Financing Decision'. Control Consideration Concept: Financial Decisions - Financing and Dividend.
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