' 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.
' 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.
The correct option is C Capital Structure
Capital structure is the concept of financial management as advised by Mr. Shah in the above situation.
Capital Structure
Capital structure is the concept of financial management as advised by Mr. Shah in the above situation.
