Arts (English Medium) Class 12 - CBSE Question Bank Solutions for Business Studies

STATEMENT I: Electronic holdings can be converted into physical certificates with the process of dematerialisation.

STATEMENT II: There is no danger of theft, loss or forgery of share certificates in dematerialisation.

Choose the correct option from the following:

Answer the following question:
The Return on Investment (ROI) of a company ranges between 10 - 12% for the past three years. To finance its future fixed capital needs, it has the following options for borrowing debt:
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.

Answer the following question.
‘Moga Industries Ltd,’ approached a well-established university in the city of Madurai to recruit qualified personnel for various technical and professional jobs. They selected Tanya, Ritu, Garima, and Chetan for various Vacancies in the organisation.
After the selection and placement, 'Moga Industries Ltd,’ felt the need to increase the skills and abilities, and the development of a positive attitude of the employees to perform their specific jobs better. The company also realised that learning new skills would improve the job performance of the employees. Hence, the company decided to take action for the same.

1) Name the step of the staffing process regarding which the company decided to take action.
2) State the benefits of the action to ‘Moga Industries Ltd.'

Meca Ltd. a reputed automobile manufacturer needs Rupees ten crores as additional capital to expand its business. Atul Jalan, the CEO of the company wanted to raise funds through equity. On the other hand the Finance Manager, Nimi Sandev said that the public issue may be expensive on account of various mandatory and non-mandatory expenses. Therefore, it was decided to allow the securities to institutional investors. Name the method through which the company decided to raise additional capital.

Explain briefly any four factors that affect the working capital requirement of a company.

'Sarah Ltd.' is a company manufacturing cotton yarn. It has been consistently earning good profits for many years. This year too, it has been able to generate enough profits. There is the availability of enough cash in the company and good prospects for growth in future. It is a well-managed organisation and believes in quality, equal employment opportunities and good remuneration practices. It has many shareholders who prefer to receive a regular income from their investments. It has taken a loan of Rs 40 lakhs from IDBI and is bound by certain restrictions on the payment of dividend according to the terms of loan agreement. The above discussion about the company leads to various factors which decide how much of the profits should be retained and how much has to be distributed by the company. Quoting the lines from the above discussion identify and explain any four such factors.

Organising involves a series of steps in order to achieve the desired goals

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

Scale of operations

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

Choice of technique

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

Technology upgradation

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

Financing alternatives

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

Nature of business

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

Scale of operations

Explain the following as factors affecting the requirements of working capital:
Seasonal factors

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

Production cycle

Explain the following as factors affecting the requirement of working capital:

The credit allowed and availed

Varunica Ltd., a reputed truck manufacturing company, needs rupees twenty crores as additional capital to expand its business. Mr. Alind Jindal, the CEO of the company, wants to raise funds through equity. The Finance Manager, Mr. Nikhil Sachdeva, suggests that the existing shareholders be offered the privilege to subscribe to new issue of shares as per the terms and conditions of the company which was agreed by Mr. Alind Jindal.
Name the method through which the company decided to raise additional capital. 

A company wants to increase its market share from the present 10% to 25% to have a dominant position in the market by the end of the next financial year. Ms Rajni, the  sales manager has been asked to prepare a proposal that  will outline the options available for achieving this objective. Her report included the following options - entering new  markets, expanding the product range offered to customers, using sales promotion techniques such as giving rebates,  discounts or increasing the budget for advertising activities.  Which step of the planning process has been performed by  Ms Rajni?

Amrit is running a ‘transport service’ and earning good returns by providing this service to industries. Giving reason, state whether the working capital requirement of the firm will be ‘less’ or ‘more’.

Ramnath is into the business of assembling and selling of televisions. Recently he has adopted a new policy of purchasing the components on three months credit and selling the complete product in cash. Will it affect the requirement of working capital? Give reason in support of your answer.