Question:
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.
Answer:
Equity shareholders get a return only when profits are left after giving interest to debenture holders and preferential dividend to preference shareholders. In case, no profits are left after it, they do not get a return. Therefore, it is unreasonable to transfer funds to general reserves which are called retained profits if there are exceptionally good profits. They took the risk of uncertain returns. Then it is their right to get exceptional returns in good times. But in good times, it is being retained to plough back into the business. Therefore, it is right to say that retained earnings are not a good source from the values point of view as it is the right of equity shareholders.
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.
What is a commercial paper? What are its advantages and limitations?
Q 6.
Give the full form of GDR and ADR.
Q 7.
Explain in detail the types of debenture a company can issue.
Q 8.
Name two sources of funds under owner's fund.
Q 9.
Explain trade credit and bank credit as sources of short term finance for business enterprises.
Q 10.
Which deposits are directly raised from the public?
Q 11.
State two factors affecting the working capital requirement of a firm.
Q 12.
Why does business enterprise need finance?
Q 13.
What do you mean by discounting of bills of exchange?
Q 14.
What advantage does issue of debentures provide over the issue of equity shares?
Q 15.
Specify the objective of I.D.B.I.
Q 16.
What is business finance? Why do businesses need funds? Explain.
Q 17.
Preference shares are preferred by company but not by investors. Why?
Q 18.
What is factoring? Discuss its pros and cons.
Q 19.
Who regulates the acceptance of public deposits?
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 is lease financing? Discuss its merits and demerits.
Q 23.
What are Indian depository receipts (IDRs)?
Q 24.
Explain different types of preference shares which can be issued by a company.
Q 25.
What are retained profits? Discuss their advantages and disadvantages.
Q 26.
Discuss the financial instruments used in international financing.
Q 27.
State various sources of short and medium term funds.
Q 28.
Why is equity share capital called Risk Capital'?
Q 29.
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 30.
Why preferences are given to preferential shares?
Q 31.
Name zones of the Lessors and Lessees in India.
Q 32.
What are public deposits?
Q 33.
Describe in brief the features of equity shares.
Q 34.
What are the two important functions of factors?
Q 35.
What is the status of debenture holders?
Q 37.
What is a trade credit?
Q 38.
Who are called the owners of a company?
Q 39.
What preferential rights are enjoyed by preference shareholders? Explain.
Q 40.
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 41.
State two factors affecting the fixed capital requirement of a firm.
Q 42.
Write a short note on the features of GDRs.
Q 43.
As a source of finance retained profit is better than other sources. Do you agree with this view? Give reasons for your answer.
Q 44.
State various sources of long term funds.
Q 45.
What are the preferences given to preference shareholders?
Q 46.
Describe briefly the factors responsible for selecting a source of finance.
Q 47.
Discuss the sources from which a large industrial enterprise can raise capital for financing modernisation and expansion.
Q 48.
State the merits and demerits of public deposits and retained earnings as methods of business finance.
Q 49.
What are retained earnings?
Q 50.
Preference shares are not suitable for which kind of investors?
