Match List-I with List-II
| List-I | List-II |
| (Financial Decision) | (Factor affecting) |
| (A) Dividend decision | (I) Shareholders' preference |
| (B) Working Capital Decision | (II) Credit availed |
| (C) Fixed Capital Decision | (III) Control considerations |
| (D) Financing Decision | (IV) Financing alternatives |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A) - (I), (B) - (II), (C) - (IV), (D) - (III)
(A) Dividend decision — this matches (I) Shareholders’ preference. Some shareholders want a regular income and others want growth. Management keeps their preference in mind when it decides how much profit to pay out.
(B) Working Capital Decision — this matches (II) Credit availed. When suppliers give goods on credit, less of the firm’s own money is tied up in stock. So more credit means less working capital is needed.
(C) Fixed Capital Decision — this matches (IV) Financing alternatives. If an asset can be taken on lease instead of being bought outright, the firm needs less money for fixed assets.
(D) Financing Decision — this matches (III) Control considerations. Issuing more equity shares brings in new owners and can weaken the control of the existing ones. A firm worried about control prefers to borrow.
NCERT (2026-27 Edition): “Factors Affecting Dividend Decision … (f) Shareholders’ Preference: While declaring dividends, managements must keep in mind the preferences of the shareholders in this regard. …” “Factors Affecting Financing Decisions … (f) Control Considerations: Issues of more equity may lead to dilution of management’s control over the business. Debt financing has no such implication. …” “Factors affecting the Requirement of Fixed Capital … 7. Financing Alternatives: A developed financial market may provide leasing facilities as an alternative to outright purchase. …” “7. Credit Availed: Just as a firm allows credit to its customers it also may get credit from its suppliers. To the extent it avails the credit on purchases, the working capital requirement is reduced.” |