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Business Studies

Financing Decision

The cheapest ...

Question

The cheapest source of finance is

A

debenture

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B

equity share capital

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C

preference share

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D

retained earning

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Solution

The correct option is D
retained earning

Retained earning is the cheapest source of finance.

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Similar questions

The cheapest source of finance is

(a) debenture

(b) equity share capital

(c) preference share

(d) retained earning

Q. Assertion :Preference shares capital is a more costly source of finance than debentures for profit-earning companies. Reason: Preference dividend is not a charge against profit under the Income Tax Act.

(a) Discuss any three characteristics of debentures.

(b) Discuss any three limitations of retained earning as a source of Finance.

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.

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

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