Capital Structure

Q.

What is meant by financing decision? State any four factors affecting the financing decision.

Q.

Which of the following is not a factor determining the capital structure.

1. Cash flow position

2. Diversification

3. Floatation costs

4. Tax rate

Q.

What is another word for borrowed money?

Q. The cost associated with the public issue of shares is known as cost.

1. Advertisement
2. Marketing
3. Floatation
4. Legal

Q.

Which of the following is not a part of owners’ funds? Find the Answer at BYJUS

1. Reserves and surplus

2. Preference shares

3. Debentures

4. Equity shares

Q. Funds invested by the owner of a business are known asfunds.

1. Short term
2. Debt
3. Equity
4. Working

Q.

___ refers to the proportion of debt and equity used for financing the operations of a business.

1. Cash Flow

2. Capital Structure

3. Investment Decision

4. Financial Decision

Q. Answer the following questions in short:

What are the different types of marine insurance policies?

Q.

These decisions affect the liquidity as well as the profitability of a business.

1. Financing decision

2. Dividend decision

3. Working capital decision

4. Capital budgeting decision

Q.

' A business that doesn't grow dies', says Mr.Shah, the owner of Shah Marble Ltd. with glorious 36 months of its grand success having a capital base of Rs 80 crores. Within a short span of time, the company could generate cash flow which not only covered fixed cash payment obligations but also created sufficient buffer. The company is on the growth path and a new breed of consumers is eager to buy the Italian marble sold by Shah Marble Ltd. To meet the increasing demand, Mr.Shah decided to expand his business by acquiring a mine. This required an investment of 120 Cr. To seek advice, he called his financial advisor, Mr. Seth also suggested a judicious mix of equity (40%) and Debt(60%). Mr. Seth advised him to take a loan from a financial institution as the cost of raising funds from financial institutions is low. Though this will increase the financial risk, it will also raise the return to equity shareholders. The interest on a loan is a tax-deductible expense for the computation of tax liability. After due deliberations with Mr.Seth, Mr.Shah decided to raise funds from a financial institution. ___ is the concept of financial management as advised by Mr. Shah in the above situation.

1. Investment Decision

2. Financial Decision

3. Capital Structure

4. Dividend Decision

Q.

Tata sons have a debt-equity ratio of 4:1 and Bajaj has 1:1 debt-equity ratio. Name the advantage, Tata sons may have over Bajaj.

1. Trading on equity

2. Return of investment

Q.

Tata sons have debt-equity ratio of 4:1 and Bajaj has 1:1 debt-equity ratio.___ is the advantage, Tata sons have over Bajaj.

1. Trading on equity

2. Finacial Investment

3. Capital Structure

4. Financial Planning

Q.

What exactly is equity?

Q.

What is equity in simple words?

Q. What is meant by 'Capital Structure' of a company?

Q.

What is the owners equity in simple words?

Q.

Why is equity so important?

Q. What is meant by 'Capital Structure'?

Q. Money market mutual funds ____________________________.

1. Enable individuals and small business to invest indirectly in money-market instruments
2. Are available only to high net-worth individuals
3. Are used in acquiring and placing mortgages
4. Are mostly tradable on stock exchange

Q. How does 'Trading on Equity' affect the Capital structure of a company? Explain with the help of a suitable example.

Q.

A company's earning before interest and tax is Rs. 7 lac. It pays 10% interest on its debt. Total investment of company is Rs. 50 lac. Name the concept related to this.

1. None of the above

2. Trading on equity

3. Debt Effect

4. Trading on shares

Q. Capital gearing refers to __________________________.

1. The proportion between fixed interest or dividend bearing funds and non-fixed interest or dividend bearing funds in the total capital employed in the business
2. The proportion between net interest and non-fixed interest or dividend bearing funds in the capital employed
3. None of the above
4. Both (A) and (B)

Q. Assertion :Capital structure refers to composition of long-term funds. Reason: These include equity share capital, preference share capital, debentures, all debts and all reserves.

1. Both Assertion and Reason are correct and Reason is the correct explanation for Assertion
2. Both Assertion and Reason are correct but Reason is not the correct explanation for Assertion
3. Assertion is correct but Reason is incorrect
4. Both Assertion and Reason are incorrect

Q. The term _____ refers to facilities and institutional arrangements through which long-term funds, both debt and equity are raised and invested.

1. Discounted market
2. International market
3. Capital market
4. Money market

Q. The total amount of in the capital structure is known as financial leverage.

1. Equity
2. Debt
3. Bills payable

Q.

How do you find the market value of equity?

Q.

Which type of companies can declare higher dividend?

Q.

Is equity considered a down payment?

Q. Decisions for raising funds from long-term sources are called __________.

1. Capital structure decision
2. Dividend decisions
3. Investment decisions
4. Investment of funds

Q. How does market capitalization of a company affects it share price?