Read the following case study and answer question.

Aninjey is a CEO of Alfa Ltd. He is running a shoe business where his company is manufacturing canvas shoes, made up of breathable t-shirt fabric. His business is having a good liquidity position. He has already issued 200 equity shares earlier and has a company policy of paying regular dividends to its shareholders. He wants to expand his business and for that he required "100 crores. He asked his Finance Manager to prepare a financial blueprint Of the same in order 10 have the right debt-equity ratio, so that a right financial balance can be maintained.

"Alfa Ltd. is manufacturing firm," Identify the factor affecting fixed capital highlighted in the statement.

Nature of Business

The correct answer is option (2) : Nature of Business

1. Inflation:

• Inflation refers to the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. Inflation is usually measured as a percentage increase in the Consumer Price Index (CPI) over time. Inflation can have a significant impact on businesses, as it affects the cost of goods and services, wages, and interest rates. Inflation can also affect the value of money over time, which can impact investment decisions

2. Nature of Business :

•The nature of business refers to the type of business activity that a company engages in. For example, a manufacturing business involves the production of goods, while a service business provides intangible services to customers. The nature of business can have a significant impact on the financial decisions that a company makes, such as the amount of fixed capital required/ the financing alternatives available, and the choice of technique used.

3. Financing Alternatives:

• Financing alternatives refer to the various sources of funds that a company can use to finance its operations. These sources can include equity financing (such as issuing shares of stock), debt financing (such as taking out loans or issuing bonds), and hybrid financing (such as convertible bonds or preferred stock). The choice of financing alternative can depend on a variety of factors, such as the company's financial position, the cost of capital, and the level of risk involved.

4. Choice of Technique:

• The choice of technique refers to the selection of a particular production process or method that a company uses to produce goods or services. The choice of technique can have a significant impact on the cost of production, the quality of the product, and the level of efficiency. The choice of technique can depend on a variety of factors, such as the nature of the business, the level of competition, and the availability of resources.