Match List-I (steps and results in the acquisition of Corus by Tata Steel) with List-II (financial concepts):
| List-I | List-II | ||
|---|---|---|---|
| (A) | Tata Steel buying Corus, a Dutch steel company | (I) | Financing decision |
| (B) | Tata Steel deciding to raise the amount through debt or equity or a combination of both | (II) | Owners’ funds |
| (C) | The mix of debt and equity of Tata Steel that resulted from the deal | (III) | Investment decision |
| (D) | The part of the amount that Tata Steel met from its internal accruals | (IV) | Capital structure |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (A)-(III), (B)-(I), (C)-(IV), (D)-(II)
| List-I | List-II | Reason |
|---|---|---|
| (A) Tata Steel buying Corus, a Dutch steel company | (III) Investment decision | Buying another company puts the firm’s funds into a long-term asset. The investment decision is about how a firm’s funds are invested in different assets. |
| (B) Tata Steel deciding to raise the amount through debt or equity or a combination of both | (I) Financing decision | The financing decision is about how much to raise from which source. Choosing debt, equity or both is that choice. |
| (C) The mix of debt and equity of Tata Steel that resulted from the deal | (IV) Capital structure | Capital structure is the mix of debt and equity in a firm’s long-term funds. The way this deal was financed changed that mix for Tata Steel. |
| (D) The part of the amount that Tata Steel met from its internal accruals | (II) Owners’ funds | Internal accruals are profits kept back in the business, that is, retained earnings. Shareholders’ (owners’) funds are equity capital plus retained earnings. |
NCERT (2026-27 Edition): “Investment Decision A firm’s resources are scarce in comparison to the uses to which they can be put. A firm, therefore, has to choose where to invest these resources, so that they are able to earn the highest possible return for their investors. The investment decision, therefore, relates to how the firm’s funds are invested in different assets. …” “Financing Decision … It involves identification of various available sources. The main sources of funds for a firm are shareholders’ funds and borrowed funds. The shareholders’ funds refer to the equity capital and the retained earnings. Borrowed funds refer to the finance raised through debentures or other forms of debt. …”
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