Business Finance

Cost of Capital Question 1.Explain the significance of Cost of Capital. (Nov 2019, 4 marks)AnswerThe cost of capital is important to arrive at correct amount and helps the management or an investor to take an appropriate decision. The correct cost of capital helps in the following decision-making: 1. Evaluation of Investment options The estimated benefits […]

Financial Analysis and Planning Ratio Analysis Question 1.Answer the following:What is quick ratio? What does it signify? (Nov 2008, 2 marks)Answer:Quick ratio also termed as “acid test ratio” is one of the best measures of liquidity.It is worked out as follows:Quick Ratio =  Quick Assets  Quick liabilities In the above formula:Quick Assets = Current Assets – InventoriesQuick liabilities […]

Types of Financing Question 1.Write short notes on following:Bridge Finance. (May 2006, Nov 2011, Nov 2016, 3, 2, 2 each marks)Answer:Bridge Finance:Meaningbridge finance ¡s a short-term loan taken by a firm from commercial banks to disperse loans sanctioned by financial institutions. Importance or Need for Bridge FinanceBridge finance as the name suggests bridges the time […]

Scope and Objectives of Financial Management Question 1.Explain the two basic functions of Financial Management. (Nov 2002, Nov 2009, 3 marks)Answer:The two basic functions of F.M. are1. Procurement of funds2. Effective use of these funds 1. Procurement of fundProcurement of funds includes: Identification of sources of finance Determination of finance mix Raising of funds Division […]

Employee Cost – CA Inter Costing Study Material Question 1.Distinguish between ‘Direct and Indirect labour costs’. [CA In ter Nov. 2001, 2 MarksjAnswer:Direct Labour Cost is the cost of benefits paid or payable to the employees which can be directly attributed to a cost object in an economically feasible manner. This can be easily identified […]