Target Exam

CUET

Subject

Business Studies

Chapter

Financial Management

Question:

Suggest in which of the following cases, the fixed capital requirement of company will be more?

(A) A firm buying from small retailers and selling it into the market
(B) Leasing a factory premises instead of buying it
(C) A textile company is diversifying into a cement manufacturing
(D) A Micro Service Enterprise
(E) A company manufacturing two wheelers and four wheelers

Choose the correct answer from the options given below:

Options:

(C), and (E) Only

(A), and (D) Only

(B) and (E) Only

(C) and (A) Only

Correct Answer:

(C), and (E) Only

Explanation:

The correct answer is Option (1) → (C), and (E) Only.

(C) A textile company diversifying into cement manufacturing will require more fixed capital because cement manufacturing involves heavy machinery, large-scale production facilities, and significant infrastructure investments.

(E) A company manufacturing both two-wheelers and four-wheelers will also require more fixed capital due to the need for large-scale production facilities, equipment, and infrastructure for the manufacture of both types of vehicles.

Other options involve businesses that may require less fixed capital.