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Question
Why do businesses need funds? Explain.
Solution
The following are the reasons why a business needs funds.
(a) Fixed capital requirements: For setting up a business, fixed assets such as building, machinery, furniture, and fixtures are required. The requirement of funds to purchase these assets is known as fixed capital requirement. The level of requirement of funds depends upon the size and nature of business.
(b) Working capital requirements: Firms require funds for financing their day-to-day operations such as the purchase of raw materials and payment of wages to workers. The requirement of funds for such operations is known as the working capital requirement.
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RELATED QUESTIONS
Business finance deals with __________ activities of business.
Match the correct pairs of words from group 'A' and group 'B'.
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Group A
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Group B
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| (a) Retained profits. | (1) Share warrant holder | |
| (b) Small depositors |
(2) Borrowed capital
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| (c) Dividend coupon |
(3) Deposits less than Rs. 25000
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| (d) Returns on shares |
(4) Interest
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| (e) Bear | (5) Expects rise in price of security. | |
| (6) Ploughing back of profit | ||
| (7) Expects fall in price of securities. | ||
| (8) Deposits less than Rs. 20,000. | ||
| (9) Share certificate holder | ||
| (10) Dividend | ||
Multiple Choice Question:
Funds required for purchasing current assets is an example of ______
Multiple Choice Question:
ADRs are issued in
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What are the advantages and limitations of commercial paper?
Choose the Correct Answer.
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Choose the Correct Answer.
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