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Name the Concept of Financial Management Which Increases the Return to Equity Shareholders Due to the Presence of Fixed Financial Charges. - Business Studies

Short Note

Name the concept of financial management which increases the return to equity shareholders due to the presence of fixed financial charges.

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Solution

The concept of financial management which increases the return to equity shareholders due to the presence of fixed financial charges is called trading on equity. When the rate of earning of the return on investment of a company is higher than the rate of interest on the borrowed funds only then a company should adopt for trading on equity.

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APPEARS IN

NCERT Class 12 Business Studies Part 2 - Business Finance and Marketing
Chapter 1 Financial Management
Very Short Answer | Q 3 | Page 253
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