Commerce Exam > Commerce Questions > Direction: Read the following text and answe...
Start Learning for Free
Direction: Read the following text and answer the following questions on the basis of the same:
Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to international market. For this purpose, the company needs additional ₹ 80,00,000 for replacing machines with modern machinery of higher production capacity. It involves committing the finance on a long-term basis. These decisions are very crucial for any business since they affect its earning capacity in the long run. The company wishes to raise the required funds by issuing debentures. The debt can be issued at an estimated cost of 10%. The EBIT for the previous year of the company was ₹ 8,00,000 and total capital investment was ₹ 1,00,00,000. Instead of issuing 10% debenture the company can issue equity shares for raising the funds. The financial manager of the company would normally opt for a source which is the cheapest.
Q. What is the other name of long-term decision ?
- a)Capital budgeting
- b)Gross working capital
- c)Financial management
- d)Working capital
Correct answer is option 'A'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Verified Answer
Direction: Read the following text and answer the following questions...
Capital budgeting decision. involves committing the finance on a long-term basis. For example, making investment in a new machine to replace an existing one or acquiring a new fixed asset or opening a new branch, etc. These decisions are very crucial for any business since they affect its earning capacity in the long run.
View all questions of this test
Most Upvoted Answer
Direction: Read the following text and answer the following questions...
Capital Budgeting
Capital budgeting is the process of making long-term decisions regarding investments in projects or assets that will affect a company's future earning capacity.
Explanation:
Importance of Long-term Decisions:
- Long-term decisions, such as investing in new machinery, can have a significant impact on a company's profitability and growth. Therefore, it is crucial for companies to carefully evaluate and plan for such investments.
Role of Financial Manager:
- The financial manager plays a key role in making decisions related to raising funds for long-term investments. They must consider factors such as cost of capital, risk, and return on investment.
Choosing the Cheapest Source:
- In the case of Sunrises Ltd., the financial manager is considering whether to issue debentures or equity shares to raise funds for replacing machinery. The decision will be based on the cost of capital associated with each option.
Capital Budgeting vs. Working Capital:
- Capital budgeting focuses on long-term investments, while working capital management deals with the day-to-day operational needs of a company. Both are essential for the overall financial health of a business.
Conclusion:
- Making informed decisions about long-term investments is crucial for the success of a company. By carefully evaluating the cost and benefits of different funding sources, companies can ensure sustainable growth and profitability in the long run.
Capital budgeting is the process of making long-term decisions regarding investments in projects or assets that will affect a company's future earning capacity.
Explanation:
Importance of Long-term Decisions:
- Long-term decisions, such as investing in new machinery, can have a significant impact on a company's profitability and growth. Therefore, it is crucial for companies to carefully evaluate and plan for such investments.
Role of Financial Manager:
- The financial manager plays a key role in making decisions related to raising funds for long-term investments. They must consider factors such as cost of capital, risk, and return on investment.
Choosing the Cheapest Source:
- In the case of Sunrises Ltd., the financial manager is considering whether to issue debentures or equity shares to raise funds for replacing machinery. The decision will be based on the cost of capital associated with each option.
Capital Budgeting vs. Working Capital:
- Capital budgeting focuses on long-term investments, while working capital management deals with the day-to-day operational needs of a company. Both are essential for the overall financial health of a business.
Conclusion:
- Making informed decisions about long-term investments is crucial for the success of a company. By carefully evaluating the cost and benefits of different funding sources, companies can ensure sustainable growth and profitability in the long run.
Attention Commerce Students!
To make sure you are not studying endlessly, EduRev has designed Commerce study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Commerce.
|
Explore Courses for Commerce exam
|
|
Similar Commerce Doubts
Top Courses for CommerceView all
Direction: Read the following text and answer the following questions on the basis of the same:Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to international market. For this purpose, the company needs additional ₹ 80,00,000 for replacing machines with modern machinery of higher production capacity. It involves committing the finance on a long-term basis. These decisions are very crucial for any business since they affect its earning capacity in the long run. The company wishes to raise the required funds by issuing debentures. The debt can be issued at an estimated cost of 10%. The EBIT for the previous year of the company was ₹ 8,00,000 and total capital investment was ₹ 1,00,00,000. Instead of issuing 10% debenture the company can issue equity shares for raising the funds. The financial manager of the company would normally opt for a source which is the cheapest.Q. What is the other name of long-term decision ? a)Capital budgetingb)Gross working capitalc)Financial managementd)Working capitalCorrect answer is option 'A'. Can you explain this answer?
Question Description
Direction: Read the following text and answer the following questions on the basis of the same:Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to international market. For this purpose, the company needs additional ₹ 80,00,000 for replacing machines with modern machinery of higher production capacity. It involves committing the finance on a long-term basis. These decisions are very crucial for any business since they affect its earning capacity in the long run. The company wishes to raise the required funds by issuing debentures. The debt can be issued at an estimated cost of 10%. The EBIT for the previous year of the company was ₹ 8,00,000 and total capital investment was ₹ 1,00,00,000. Instead of issuing 10% debenture the company can issue equity shares for raising the funds. The financial manager of the company would normally opt for a source which is the cheapest.Q. What is the other name of long-term decision ? a)Capital budgetingb)Gross working capitalc)Financial managementd)Working capitalCorrect answer is option 'A'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Direction: Read the following text and answer the following questions on the basis of the same:Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to international market. For this purpose, the company needs additional ₹ 80,00,000 for replacing machines with modern machinery of higher production capacity. It involves committing the finance on a long-term basis. These decisions are very crucial for any business since they affect its earning capacity in the long run. The company wishes to raise the required funds by issuing debentures. The debt can be issued at an estimated cost of 10%. The EBIT for the previous year of the company was ₹ 8,00,000 and total capital investment was ₹ 1,00,00,000. Instead of issuing 10% debenture the company can issue equity shares for raising the funds. The financial manager of the company would normally opt for a source which is the cheapest.Q. What is the other name of long-term decision ? a)Capital budgetingb)Gross working capitalc)Financial managementd)Working capitalCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Direction: Read the following text and answer the following questions on the basis of the same:Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to international market. For this purpose, the company needs additional ₹ 80,00,000 for replacing machines with modern machinery of higher production capacity. It involves committing the finance on a long-term basis. These decisions are very crucial for any business since they affect its earning capacity in the long run. The company wishes to raise the required funds by issuing debentures. The debt can be issued at an estimated cost of 10%. The EBIT for the previous year of the company was ₹ 8,00,000 and total capital investment was ₹ 1,00,00,000. Instead of issuing 10% debenture the company can issue equity shares for raising the funds. The financial manager of the company would normally opt for a source which is the cheapest.Q. What is the other name of long-term decision ? a)Capital budgetingb)Gross working capitalc)Financial managementd)Working capitalCorrect answer is option 'A'. Can you explain this answer?.
Direction: Read the following text and answer the following questions on the basis of the same:Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to international market. For this purpose, the company needs additional ₹ 80,00,000 for replacing machines with modern machinery of higher production capacity. It involves committing the finance on a long-term basis. These decisions are very crucial for any business since they affect its earning capacity in the long run. The company wishes to raise the required funds by issuing debentures. The debt can be issued at an estimated cost of 10%. The EBIT for the previous year of the company was ₹ 8,00,000 and total capital investment was ₹ 1,00,00,000. Instead of issuing 10% debenture the company can issue equity shares for raising the funds. The financial manager of the company would normally opt for a source which is the cheapest.Q. What is the other name of long-term decision ? a)Capital budgetingb)Gross working capitalc)Financial managementd)Working capitalCorrect answer is option 'A'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Direction: Read the following text and answer the following questions on the basis of the same:Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to international market. For this purpose, the company needs additional ₹ 80,00,000 for replacing machines with modern machinery of higher production capacity. It involves committing the finance on a long-term basis. These decisions are very crucial for any business since they affect its earning capacity in the long run. The company wishes to raise the required funds by issuing debentures. The debt can be issued at an estimated cost of 10%. The EBIT for the previous year of the company was ₹ 8,00,000 and total capital investment was ₹ 1,00,00,000. Instead of issuing 10% debenture the company can issue equity shares for raising the funds. The financial manager of the company would normally opt for a source which is the cheapest.Q. What is the other name of long-term decision ? a)Capital budgetingb)Gross working capitalc)Financial managementd)Working capitalCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Direction: Read the following text and answer the following questions on the basis of the same:Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to international market. For this purpose, the company needs additional ₹ 80,00,000 for replacing machines with modern machinery of higher production capacity. It involves committing the finance on a long-term basis. These decisions are very crucial for any business since they affect its earning capacity in the long run. The company wishes to raise the required funds by issuing debentures. The debt can be issued at an estimated cost of 10%. The EBIT for the previous year of the company was ₹ 8,00,000 and total capital investment was ₹ 1,00,00,000. Instead of issuing 10% debenture the company can issue equity shares for raising the funds. The financial manager of the company would normally opt for a source which is the cheapest.Q. What is the other name of long-term decision ? a)Capital budgetingb)Gross working capitalc)Financial managementd)Working capitalCorrect answer is option 'A'. Can you explain this answer?.
Solutions for Direction: Read the following text and answer the following questions on the basis of the same:Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to international market. For this purpose, the company needs additional ₹ 80,00,000 for replacing machines with modern machinery of higher production capacity. It involves committing the finance on a long-term basis. These decisions are very crucial for any business since they affect its earning capacity in the long run. The company wishes to raise the required funds by issuing debentures. The debt can be issued at an estimated cost of 10%. The EBIT for the previous year of the company was ₹ 8,00,000 and total capital investment was ₹ 1,00,00,000. Instead of issuing 10% debenture the company can issue equity shares for raising the funds. The financial manager of the company would normally opt for a source which is the cheapest.Q. What is the other name of long-term decision ? a)Capital budgetingb)Gross working capitalc)Financial managementd)Working capitalCorrect answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of Direction: Read the following text and answer the following questions on the basis of the same:Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to international market. For this purpose, the company needs additional ₹ 80,00,000 for replacing machines with modern machinery of higher production capacity. It involves committing the finance on a long-term basis. These decisions are very crucial for any business since they affect its earning capacity in the long run. The company wishes to raise the required funds by issuing debentures. The debt can be issued at an estimated cost of 10%. The EBIT for the previous year of the company was ₹ 8,00,000 and total capital investment was ₹ 1,00,00,000. Instead of issuing 10% debenture the company can issue equity shares for raising the funds. The financial manager of the company would normally opt for a source which is the cheapest.Q. What is the other name of long-term decision ? a)Capital budgetingb)Gross working capitalc)Financial managementd)Working capitalCorrect answer is option 'A'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Direction: Read the following text and answer the following questions on the basis of the same:Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to international market. For this purpose, the company needs additional ₹ 80,00,000 for replacing machines with modern machinery of higher production capacity. It involves committing the finance on a long-term basis. These decisions are very crucial for any business since they affect its earning capacity in the long run. The company wishes to raise the required funds by issuing debentures. The debt can be issued at an estimated cost of 10%. The EBIT for the previous year of the company was ₹ 8,00,000 and total capital investment was ₹ 1,00,00,000. Instead of issuing 10% debenture the company can issue equity shares for raising the funds. The financial manager of the company would normally opt for a source which is the cheapest.Q. What is the other name of long-term decision ? a)Capital budgetingb)Gross working capitalc)Financial managementd)Working capitalCorrect answer is option 'A'. Can you explain this answer?, a detailed solution for Direction: Read the following text and answer the following questions on the basis of the same:Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to international market. For this purpose, the company needs additional ₹ 80,00,000 for replacing machines with modern machinery of higher production capacity. It involves committing the finance on a long-term basis. These decisions are very crucial for any business since they affect its earning capacity in the long run. The company wishes to raise the required funds by issuing debentures. The debt can be issued at an estimated cost of 10%. The EBIT for the previous year of the company was ₹ 8,00,000 and total capital investment was ₹ 1,00,00,000. Instead of issuing 10% debenture the company can issue equity shares for raising the funds. The financial manager of the company would normally opt for a source which is the cheapest.Q. What is the other name of long-term decision ? a)Capital budgetingb)Gross working capitalc)Financial managementd)Working capitalCorrect answer is option 'A'. Can you explain this answer? has been provided alongside types of Direction: Read the following text and answer the following questions on the basis of the same:Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to international market. For this purpose, the company needs additional ₹ 80,00,000 for replacing machines with modern machinery of higher production capacity. It involves committing the finance on a long-term basis. These decisions are very crucial for any business since they affect its earning capacity in the long run. The company wishes to raise the required funds by issuing debentures. The debt can be issued at an estimated cost of 10%. The EBIT for the previous year of the company was ₹ 8,00,000 and total capital investment was ₹ 1,00,00,000. Instead of issuing 10% debenture the company can issue equity shares for raising the funds. The financial manager of the company would normally opt for a source which is the cheapest.Q. What is the other name of long-term decision ? a)Capital budgetingb)Gross working capitalc)Financial managementd)Working capitalCorrect answer is option 'A'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Direction: Read the following text and answer the following questions on the basis of the same:Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to international market. For this purpose, the company needs additional ₹ 80,00,000 for replacing machines with modern machinery of higher production capacity. It involves committing the finance on a long-term basis. These decisions are very crucial for any business since they affect its earning capacity in the long run. The company wishes to raise the required funds by issuing debentures. The debt can be issued at an estimated cost of 10%. The EBIT for the previous year of the company was ₹ 8,00,000 and total capital investment was ₹ 1,00,00,000. Instead of issuing 10% debenture the company can issue equity shares for raising the funds. The financial manager of the company would normally opt for a source which is the cheapest.Q. What is the other name of long-term decision ? a)Capital budgetingb)Gross working capitalc)Financial managementd)Working capitalCorrect answer is option 'A'. Can you explain this answer? tests, examples and also practice Commerce tests.
|
|
Explore Courses for Commerce exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup