Question

Tractors Pvt. Ltd. producing 2,00,000 trucks and generating revenue of Rs. 2,000 crores annually, has recently acquired the world's second largest truck manufacturing company. After this acquisition, Tractors Pvt. Ltd. will become the world's largest truck manufacturer. For financing the acquisition, the company had to arrange about  Rs. 1,00,000 crores through debt and equity. ______ function is being performed by the company for arranging the funds through debt and equity.

विकल्प

• Investment

• Financing

• Dividend

• All of these

Answer 1

Financing

Explanation -

The issuance of additional equity may result in a dilution of management's influence over the company. Debt finance, on the other hand, has no such implications. Debt would be preferred above equity by companies fearful of a takeover bid.