To finance its take-over of Corus, Tata Steel raised the amount through debt or equity or a combination of both, and some amount came from internal accruals.
What type of decision was this, and what did it affect?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → A financing decision, which affected the capital structure of the acquirer
Option (1) An investment decision, which affected the capital structure of the acquirer — Incorrect. Buying Corus was an investment. But the line is about raising the money for it, which is a financing decision.
Option (2) A financing decision, which affected the working capital of the acquirer — Incorrect. The decision is named rightly, but its effect is not. Working capital is the money put into current assets such as cash, inventory and receivables. The mix of debt and equity is something else.
Option (3) An investment decision, which affected the working capital of the acquirer — Incorrect. Both parts are wrong. Raising funds is a financing decision, and the choice of sources does not decide the level of current assets.
Option (4) A financing decision, which affected the capital structure of the acquirer — Correct. A financing decision is about how much to raise and from which source. Tata Steel chose among debt, equity and internal accruals. Capital structure is the mix of owners’ and borrowed funds, so this choice changed it.
NCERT (2026-27 Edition):
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