Financial Management Business Studies - Financial Management

Objective type question.Other things remaining the same, an increase in the tax rate on corporate profits will:

Decisions related to investment in fixed assets are popularly known as:

Which of the following is an objective of financial planning?

Rizul Bhattacharya after leaving his job wanted to start a Private Limited Company with his son. His son was keen that the company may start manufacturing of Mobile- phones with some unique features. Rizul Bhattacharya felt that the mobile phones are prone to quick obsolescence and a heavy fixed capital investment would be required regularly in this business. Therefore he convinced his son to start a furniture business.
Identify the factors affecting fixed capital requirements which made Rizul Bhattacharya to choose furniture business over mobile phones.

What is meant by ‘Financial Risk’?

What is meant by ‘Capital Structure’?

Name and state the aspect of financial management that enables foresee the fund requirements both in terms of 'the quantum' and 'the timings'.

How does 'cost of equity' affect the choice of capital structure of a company? Explain.

Ramnath Ltd. is dealing in import of organic food items in bulk. The company sells the items in smaller quantities in attractive packages. Performance of the company has been up to the expectations in the past. Keeping up with the latest packaging technology, the company decided to upgrade its machinery. For this, the Finance Manager of the company, Mr. Vikrant Dhull, estimated the amount of funds required and the timings. This will help the company in linking the investment and the financing decisions on a continuous basis.
Therefore, Mr. Vikrant Dhull began with the preparation of a sales forecast for the next four years. He also collected the relevant data about the profit estimates in the coming years. By doing this, he wanted to be sure about the availability of funds from the internal sources. For the remaining funds he is trying to find out alternative sources.
Identify the financial concept discussed in the above paragraph. Also, state any two points of importance of the financial concept, so identified.

What is meant by ‘Financial Planning’? State any two points of its importance.

Explain the importance of ‘Financial Planning’.

''Sound Financial Management is the key to the prosperity of business''. Explain.

Explain in brief any three causes of ‘Under-capitalisation’.

Give the meaning of ‘Investment’ and ‘Financing’ decisions of financial management.

What is meant by ‘Investment Decision’? State any three factors which affect the ‘Investment Decision’.

Explain the concept and the objective of Financial Management.

Explain any four factors which affect the ‘Fixed Capital’ requirements of a company.

Investment decision can be long-term or short-term. Explain longterm investment decision and state any two factors affecting this decision.

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

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

1. Business cycle.
2. Operating efficiency.
3. Availability of raw material.
4. Level of competition.

Explain briefly any four factors that affect the fixed capital requirements of a company.

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

1. Scale of operations.
2. Choice of technique.
3. Technology upgradation.
4. Financing alternative.

Explain the following as factors affecting ‘dividend decision’:

1. Stability of dividend.
2. Shareholders’ preference.
3. Legal constraints.
4. Access to capital market.

_________ refers to an increase in profit earned by the equity shareholders due to the presence of fixed financial charges, like interest.

_________ ensures that enough funds are available at right time.

________ affect the liquidity as well as profitability of a business.

_________ is the primary objective of financial management.

_________ is the activity concerned with the planning, raising, controlling and administering of funds used in the business.

The working capital requirements of a company is affected by inflation. (True/ False)

Dividend decisions are affected by legal and contractual constraints. (True/ False)

'Production cycle' does not affect the requirement of working capital of a company. (True/ False)

Capital budgeting decisions are very crucial for a business. (True/ False)

Current Assets = Current Liabilities - Working Capital. (True/ False)