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प्रश्न
______ refers to the increase in profit earned by the equity shareholders due to the presence of fixed financial charges like interest.
विकल्प
Capital structure
Earning per share
Trading on equity
Return on investment
उत्तर
Trading on equity refers to the increase in profit earned by the equity shareholders due to the presence of fixed financial charges like interest.
Explanation:
Trading on equity is a financial strategy in which a corporation uses borrowed capital to generate income that exceeds the cost of borrowing in order to increase the return on equity shareholders' investments. The approach is known as trading on equity since the only stake (or equity) in the firm profits belongs to the equity shareholders.
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संबंधित प्रश्न
Explain briefly any four factors which affect the choice of capital structure of a company.
What is meant by Capital Structure?
What is meant by Trading on Equity?
Explain the following as factor affecting the choice of capital structure:
Cash flow position
Explain the following as factors affecting the choice of capital structure:
Stock-Market conditions
Explain the following as factors affecting the choice of capital structure:
Flexibility
Explain any four factors that affect the choice of capital structure of a company.
What is meant by capital structure?
Explain the term ‘Trading on Equity’? Why, when and how it can be used by company.
Write the internal factors influencing Capital Structure.
Financial leverage is called favourable if :
______ refers to a situation when a company is not able to meet its fixed financial charges.
Which component of capital structure determines the overall financial risk?
Assertion (1): Higher the flotation cost, less attractive the source.
Reason (R): The choice between the payment of dividend and retaining the earnings is, to some extent, affected by the difference in the tax treatment of dividends and capital gains.
The Board of directors of Medex Pharma Ltd. decided to issue debentures worth ₹ 40 lakhs in order to finance a major Research and Development project. This would increase the Debt Equity ratio from 1:1 to 2:1.However, at the same time it would increase the Earnings per share.
The reason that will justify the above situation is ______.
