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Explain the Following as Factors Affecting the Requirements of Fixed Capital: Financing Alternatives - Business Studies

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Question

Explain the following as factors affecting the requirements of fixed capital:

Financing alternatives

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Solution

Financing alternatives:
If leasing facilities are available without any lengthy procedures in the financial market, then the fixed capital requirements will be less.

Non-availability of financing alternatives ⇒  More fixed capital

Availability of financing alternatives ⇒ Less fixed capital

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2013-2014 (March) Delhi Set 1

RELATED QUESTIONS

Match the pairs 

Group A

Group B

a. Fixed Capital

1. Owned Capital

b, Overdraft facility

2. Bearer document

c. Share certificate

3. Investment in fixed assets

d. Debentures

4. Current Account

e. Return on shares

5. Application Money

 

 

 

 

 

6. Dividend

7. Investment in current assets

8. Borrowed capital

9. Savings Account

10. Registered Document


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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.


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Name the method through which the company decided to raise additional capital. 


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Requirement of working capital does not depend upon any factor.


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A business firm should have extra funds to meet future emergencies. Identify the type of working capital indicated here.


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