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Important Questions For CBSE Class 11 Business Studies Chapter 8 - Sources of Business Finance
Important Questions For CBSE Class 11 Business Studies Chapter 8 - Sources of Business Finance
Business Studies
Chapter 8 – Sources of Business Finance
5. Name the return given to debenture holders for using their funds?
Ans: Debenture holders receive a fixed rate of interest for the use of their funds.
6. Name the one unique feature of ‘’Retained Earnings’’ which is not available
in any other source of finance?
Ans: It is a self-sustaining source of income with no upfront costs. Retained
earnings refers to a percentage of net earnings that is kept in the business for future
usage.
10. Write any one similarity between Equity share capital and preference
share capital.
Ans: They are included in the owner's capital.
11. Write the names of 2 Indian companies that offer Factoring services.
Ans: SBI Factors and Commercial Services Ltd., Canbank Factors Ltd., are two
Indian companies that provide factoring services.
13. What factors influence the working capital need in a business? Write any
three
Ans: The factors influencing the working capital need in a business are:
Nature of Business: Manufacturing business requires more working capital
as compared to trading business or service provider.
Returns In the case of shares, the dividend In the case of debentures, the
payment is not fixed, and is based on corporation pays a fixed rate
the profits of the company of interest.
19. Discuss the various international sources from where the funds can be
generated.
Ans: Organizations can raise funds in a variety of ways on a global scale.
a. Commercial Banks
Commercial banks throughout the world issue foreign currency loans for
business purposes. Banks offer different forms of loans and services
depending on the country. These banks act as an important source of
financing to non-trade international operations. They extend their support all
over the world for foreign currency loans. For example: Standard Chartered.
b. International Agencies and Development Banks
They provide medium to long term loans for the development of
economically backward areas of the world. These are set up by the
governments of various developed countries. Example: EXIM Bank and
Asian Development Bank (ADB).
c. International Capital Markets
20. From which source a firm can raise long-term funds as loans when not
provided by a commercial bank? Discuss its merits.
Ans: Financial Institutions
There are numerous financial institutions established by the government of India
across the country. These institutions finance the businesses and are set up by both
state and central governments. There are development banks especially established
to promote industrial development in the country.
Merits
24. ‘’Ojas Auto Ltd. ‘’ is a very well-known auto company in the industry
having more equity share capital than long term debt in its capital structure.
It is willing to expand and establish a new unit in the backward region and
wants to train the tribal women in skill Development to empower them. It has
a huge amount of cash reserve of Rs. 1000 crores.
(a) What is the status of the capital structure of the above company?
Ans: The company's financial structure is robust, with more equity share capital
than long-term debt in its capital structure and a large cash reserve.