Business Studies- Financial Management

Increased use of debt lowers the overall cost of capital ✘ Decrease in use of debt lowers overall cost of capital ✘ Increase in use of debt increases the overall cost of capital ✘ None of the above ✔

Increased use of debt increases the financial risk of a business. ✘ Increased use of debt decreases the financial risk of a business. ✘ Decrease in use of debt increases the financial risk of a business. ✘ None of the above ✔

The cost of debt is higher than cost of equity. ✘ The lender's risk is lower then equity shareholder's risk. ✘ The interest paid on debt is treated as a tax deductible expense. ✘ None of the above ✔

Loan from financial institutions ✘ Debentures ✘ Retained earnings ✘ Public deposits ✔

Equity shares ✘ Reserves and surplus ✘ Debentures ✘ Preference shares ✔

It helps in avoiding business shocks and surprises. ✘ If helps in co-ordinating various business functions. ✘ If helps to reduce waste, duplication of efforts and gaps in planning. ✘ It tries to delink the present with the future. ✔

Growth prospects ✘ Performance of the organisation ✘ Investments ✘ All of these ✔

Objectives ✘ Budgets ✘ Programs ✘ Policies ✔

Estimation of expected profit, Preparation of a sales forecast, Preparation of financial statements ✘ Preparation of a sales forecast, Preparation of financial statements, Estimation of expected profit ✘ Preparation of a sales forecast, Estimation of expected profit, Preparation of financial statements ✘ Preparation of financial statements, Estimation of expected profit, Preparation of a sales forecast ✔

Ensuring enough funds are available at the right time ✘ Ensuring excess availability of funds at the right time ✘ Ensuring smooth business operations ✘ All of these ✔