DAV SCHOOL, PALLIKARANAI

BUSINESS STUDIES
CASE STUDIES

1.Mercury ltd. decided to donate 2% of its sales to ‘Child Rights and you(CRY)’ for improving the condition of
children in India. This initiative by the company was highly appreciated by the public and their sales increased by
10%.Identify the interest group towards which Mercury Ltd is discharging its social responsibility.
2. Craft enterprises pays wages to its employees at a rate which is much lower than the minimum wages prescribed by
the government. The working conditions in the factory are inappropriate as there is lack of proper ventilation and there
is a strict rule against formation of trade union. Against which ‘Group’ craft enterprises has ignored the social
responsibility? Mention any four responsibilities which the firm should have towards this ‘Group’.
3.The management of Mars ltd manipulated its financial statements to show lesser earnings so that low rate of
dividend can be given.Do you think this act of Mars ltd is justified? Identify the group whose interest is being ignored.
4.Stars ltd uses rocks, trees, electric poles, walls of historical monuments to advertise its products. This advertising
policy has made their product known to the public. Do you think the company is socially responsible?
5.Intex Ltd is a well-known company engaged in manufacturing of packed frozen ready to eat items. The company is
committed to take proper precautions against malpractices likeadulteration,poor quality and misleading advertising.
The company not only follow the rules and regulations of the country, it also plays the due amount of tax regularly.
The company has created proper and safe working conditions. Intex maintains proper financial records and aims to
ensure efficient utilisation of funds. The company has taken all reasonable steps to protect natural environment and
avoid any type of pollution. By quoting lines from paragraph, Identify the different interest groups towards which the
company is fulfilling its social responsibilities.
6.Which form of business organisation is suitable in the following cases?
i. The business organisation should have stability and continuity.
ii. There should be minimum expenses in starting the business.
iii. The business organisation should be suitable from the point of view of investors.
iv. The ancestral property is to be used for doing the business.
v. More funds and professional services are required.
7. After completing the graduation, three close friends (Gopal, Shankar, Vinod) decided to start a partnership business
of manufacturing mobile accessories. However,all three of them are confused about the type of partnership, they
should start.
i. Gopal wants that partnership should be such that it can be brought to an end at the desire of any partner.
ii. Shankar wants to do the partnership business for a period of three years only.
iii.Vinod wants his liability should be limited in the business.
Identify the types of partnership that the three friends referring to.
8.Anirudh is planning to start a Departmental Store. However, he does not have full idea about capital requirements
for the store. So, he discussed about this with Mr. Sanjay Aggarwal, a financial consultant. Mr. Sanjay tells Anirudh
that capital needs for his departmental store can be divided following two categories:
(i) Funds are needed to buy premises, furniture and fixtures and refrigeration equipment.
(ii) Funds are also needed to buy goods and for meeting day-to-day expenses like wages, salaries,electricity
expenses, etc.
Identify the two types of capital being described above by Mr. Sanjay.
9.Owners" funds are provided by the owners of the business and are known as capital in the case of sole proprietor,
partnership, limited liability partnership, etc. It is called share capital in the case of incorporated bodies like a
company or cooperative society. Owners' funds also include profits earned by business that are reinvested in the
business and are called as retained earnings, ploughing back of profits or self-financing. The main features of owners'
funds are that these are available for a longer duration and need not to be returned during the lifetime of the business.
On the basis of these funds, the share of the owners in the management and ownership of the assets is decided.
(i Owners' funds are ______ (Permanent /Temporary) source of finance.
(il) Holders of owners' funds get interest at a fixed rate at regular intervals, even in case of low
earnings or losses. (True / False)
10.These funds are provided through borrowings and loans. These funds are available on certain terms and conditions
for a specific period after which these are to be returned. These are risky source of funds as these involve the payment
of interest at a certain rate and repayment of principal amount as per the contract, which is to be paid even if there are
losses in the business.
(i) Which source of funds has been highlighted in the given para?
(ii) State any three sources of category of fund highlighted in (i) above.
(iii) The providers of category of fund highlighted in (i) above get the right to control over the
management of business. (True/False).
11.Pluto Electricals Ltd. has been successfully manufacturing electrical accessories for the past ten years. As the profit
margin is good, the company has been managing all the financial requirements of the business through the profits
reinvested in the business. Identify the source of finance being mentioned in the given case and state its four features.
12.On 13th May, 2010, Standard Chartered PLC was the first foreign company to raise funds from Indian Securities
Market through issue of financial instrument denominated in Indian Rupees. Identify the instrument through which
Standard Chartered PLC raised funds from the Indian capital market.
13.These are the unsecured deposits invited by companies from the public mainly to finance working capital needs. A
company can use this source of finance for a period of six months to three years
Therefore, they are primarily a source of short-term finance. However, they can be renewed from time-to-time.
Renewal facility enables companies to use them as medium-term finance. Amount raised from this source of finance
cannot exceed 25% of its share capital and free reserves. Companies prefer this source of finance because they are
cheaper than bank loans and investors prefer it because rate of interest on this source is higher than on bank deposits.
i. Identify the source of finance highlighted in the given case
ii. State any three features of source of finance highlighted in (i) above.
iii. The source of finance highlighted in (i) above is regulated by ________ (Reserve Bank of
India/State Bank of India).
15.Under this type of commercial financing, customer is allowed to purchase goods or services and pay the supplier at
a later scheduled date. When the seller of goods or services allows the buyer to pay for the goods or services at a later
date, the seller is said to extend credit to the buyer. For example. suppose a customer is granted credit with terms of
4/10, net 30. This means that the customer has 30 days from the invoice date within which he has to pay to the seller.
In addition, a cash discount of 4% from the stated sales price will be given to the customer if payment is made within
10 days of invoicing. It is a good way for businesses to free up cash flow and finance short-term growth.
(i) Identify the source of finance highlighted in the given case
(ii) State any two features of source of finance highlighted in (i) above.
(iii) The source of finance highlighted in (i)above is a part of___ (Owners' / Borrowed) Funds.