Question:
What is business finance? Why do businesses need funds? Explain.
Answer:
Business is concerned with production and distribution of goods and services for the satisfaction of need of society. A business cannot function unless adequate funds are made available to it. The need of fund arises from the stage when an entrepreneur makes a decision to start a business. Some funds are needed immediately. The financial need of a business can be categorized in the following ways:
- Fixed Capital Requirements: In order to start business, funds are required to purchase fixed assets like land and building, plant and machinery, and furniture and fixures. This is known as fixed capital requirement of an enterprise.
- Working Capital Requirements: The financial requirements of an enterprise do not end with the procurement of fixed assets. No matter how small or large business, it need funds for its day-to-day operations. This is known as working capital of an enterprise which is used for holding current assets like stock, bill receivable, current expenses etc. Therefore, a business needs funds to meet its fixed as well as working capital requirements.
Sources of Business Finance
Q 1.
Write a note on international sources of finance.
Q 2.
In leasing agreement what right is given to lessee?
Q 3.
Differentiate between a share and a debenture.
Q 4.
Give the full form of GDR and ADR.
Q 6.
Explain in detail the types of debenture a company can issue.
Q 7.
What is a commercial paper? What are its advantages and limitations?
Q 8.
Name two sources of funds under owner's fund.
Q 9.
Which deposits are directly raised from the public?
Q 10.
Explain trade credit and bank credit as sources of short term finance for business enterprises.
Q 11.
State two factors affecting the working capital requirement of a firm.
Q 12.
What advantage does issue of debentures provide over the issue of equity shares?
Q 13.
Why does business enterprise need finance?
Q 14.
What do you mean by discounting of bills of exchange?
Q 15.
Specify the objective of I.D.B.I.
Q 16.
Preference shares are preferred by company but not by investors. Why?
Q 17.
What is business finance? Why do businesses need funds? Explain.
Q 18.
Who regulates the acceptance of public deposits?
Q 19.
What is factoring? Discuss its pros and cons.
Q 20.
State the meaning of finance. What factors determine working capital and fixed capital requirements of a business?
Q 21.
Name any three special financial institutions and state their objectives.
Q 22.
What are Indian depository receipts (IDRs)?
Q 23.
What is lease financing? Discuss its merits and demerits.
Q 24.
Discuss the financial instruments used in international financing.
Q 25.
Why preferences are given to preferential shares?
Q 26.
What are retained profits? Discuss their advantages and disadvantages.
Q 27.
State various sources of short and medium term funds.
Q 28.
Why is equity share capital called Risk Capital'?
Q 29.
Explain different types of preference shares which can be issued by a company.
Q 30.
Retained earnings are not a good source from the values point of view as it is the right of equity shareholders. Do you agree? Justify your answer.
Q 31.
What are public deposits?
Q 32.
Name zones of the Lessors and Lessees in India.
Q 33.
What is the status of debenture holders?
Q 35.
Describe in brief the features of equity shares.
Q 36.
What preferential rights are enjoyed by preference shareholders? Explain.
Q 37.
What are the two important functions of factors?
Q 38.
What is a trade credit?
Q 39.
Who are called the owners of a company?
Q 40.
State various sources of long term funds.
Q 41.
What is the difference between GDR and ADR? Explain.
Q 42.
State two factors affecting the fixed capital requirement of a firm.
Q 43.
Mr. John has ? 1,00,000 for investment purposes. Should he invest in equity shares, preference shares, public deposits or debentures? Justify your answer.
Q 44.
List sources of raising long-term and short term finance.
Q 45.
List different types of finance.
Q 46.
Preference shares are not suitable for which kind of investors?
Q 47.
What are the preferences given to preference shareholders?
Q 48.
Classify internal and external sources on the basis of time.
Q 49.
Describe briefly the factors responsible for selecting a source of finance.
Q 50.
Debentures are good from debenture holders point of view but not for business. Do you agree? Explain.
