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Home Questions 2CR4ANQ7FC
Target Exam

CUET

Subject

Business Studies

Chapter

Financial Management

Question:

Match the following lists.

LIST I LIST II
A) Cash flow positions I) In bullish market- shares are easily sold even at high price
B) Regulatory framework II) Cash flow payments must have sufficient buffer stock
C) Stock market conditions III) Debt-equity ratios of other companies in the same industry
D) Capital structure of other companies IV) Public issue of shares and debenture have to be made under SEBI

Choose the correct answer from the options given below.

Options:

A-II, B-IV, C-I, D-III

A-I, B-IV, C-II, D-III

A-III, B-IV, C-II, D-I

A-I, B-III, C-IV, D-II

Correct Answer:

A-II, B-IV, C-I, D-III

Explanation:

The correct answer is option 1- A-II, B-IV, C-I, D-III.

LIST I LIST II
A) Cash flow positions II) Cash flow payments must have sufficient buffer stock
B) Regulatory framework IV) Public issue of shares and debenture have to be made under SEBI
C) Stock market conditions I) In bullish market- shares are easily sold even at high price
D) Capital structure of other companies III) Debt-equity ratios of other companies in the same industry

Cash flow positions: Cash flows must not only cover fixed cash payment obligations but there must be sufficient buffer also. 

Regulatory framework: Every company operates within a regulatory framework provided by the law e.g., public issue of shares and debentures have to be made under SEBI guidelines.

Stock market conditions:  If the stock markets are bullish, equity shares are more easily sold even at a higher price. However, during a bearish phase, a company, may find raising of equity capital more difficult and it may opt for debt.

Capital structure of other companies: A useful guideline in the capital structure planning is the debt equity ratios of other companies in the same industry. There are usually some industry norms which may help.

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