Class 12 Business Studies Important Chapter 9 Financial Management, Financial Markets

Class 12 Business Studies Important Chapter 9 Financial Management, Financial Markets Solutions English Medium As Per The New Syllabus to each chapter is provided in the list so that you can easily browse through different chapters ASSEB Class 12 Business Studies Important Solutions in English and select need one. AHSEC Class 12 Business Studies Additional Notes Download PDF. HS 2nd Year Business Studies Additional Solutions.

Class 12 Business Studies Important Chapter 9 Financial Management, Financial Markets

Also, you can read the NCERT book online in these sections Solutions by Expert Teachers as per Central Board of Secondary Education (CBSE) Book guidelines. ASSEB Class 12 Business Studies Additional Question Answer are part of All Subject Solutions. Here we have given HS 2nd Year Business Studies Important Solutions English Medium for All Chapters, You can practice these here.

Financial Management, Financial Markets

Chapter: 9

PART – B Business Finance and Marketing

IMPORTANT QUESTION AND ANSWER

Answer The Following Questions:

1. What is meant by financial analysis?

Ans: Financial analysis refers to examining financial statements to assess the profitability, liquidity, and stability of a business.

2. Define floatation cost.

Ans: Floatation cost is the expenditure incurred by a company in raising funds through issue of securities, such as underwriting charges, brokerage, and advertisement.

3. What do you mean by internal accruals?

Ans: Internal accruals are funds generated within the business through retained earnings, depreciation, and provisions.

4. Differentiate between fixed capital and working capital.

Ans: Fixed capital is invested in long-term assets like machinery, while working capital is invested in short-term assets like stock and debtors.

5. State one major limitation of using more debt in capital structure.

Ans: Excessive debt increases financial risk because fixed interest and repayment obligations must be met.

6. Explain the term “financial blueprint”.

Ans: It is a detailed financial plan forecasting the requirements of funds and their sources for future operations of a firm.

7. What is meant by liquidity?

Ans: Liquidity is the ability of a business to meet its short-term obligations on time without facing financial stress.

8. What is EBIT-EPS analysis?

Ans: It shows the effect of different financing options on Earnings Per Share by comparing earnings before interest and tax with interest cost.

9. Explain the meaning of preference shares.

Ans: Preference shares are those which carry a fixed dividend and have priority over equity shares in payment of dividend and capital.

10. What is a financial risk?

Ans: Financial risk is the possibility of a company being unable to meet its fixed financial obligations like interest and repayment of debt.

11. State one advantage of retained earnings as a source of finance.

Ans: It avoids flotation cost and does not dilute ownership control.

12. Why is ROI important for financing decisions?

Ans: Because ROI determines whether the use of debt will increase or decrease the return to equity shareholders.

13. Explain the concept of cash budget.

Ans: A cash budget is a financial statement estimating expected cash inflows and outflows during a given period to ensure liquidity.

14. Give one example of a factor affecting dividend policy.

Ans: Growth opportunities: firms with expansion plans prefer to retain profits rather than distribute them.

15. Mention one difference between equity shareholders and debenture holders.

Ans: Equity shareholders are owners of the company, whereas debenture holders are creditors.