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Home Questions 2CR4ANQ7FC
Target Exam

CUET

Subject

Business Studies

Chapter

Financial Management

Question:

Match the following:

1. Cash flow positions A. In bullish market- shares are easily sold even at high price
2. Regulatory framework B. Cash flow payments must have sufficient buffer stock
3. Stock market conditions C. Debt-equity ratios of other companies in the same industry
4. Capital structure of other companies D. Public issue of shares and debenture have to be made under SEBI
Options:

1-B, 2-D, 3-A, 4-C

1-A, 2-D, 3-C, 4-B

1-C, 2-D, 3-B, 4-A

1-B, 2-D, 3-C, 4-A

Correct Answer:

1-B, 2-D, 3-A, 4-C

Explanation:

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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