What is the primary difference between fixed capital and working capital?

Fixed capital is used for short-term expenses, while working capital is for long-term investments.

Fixed capital is required for day-to-day operational expenses, while working capital is for permanent assets.

Fixed capital is used to finance the purchase of machinery, while working capital is used for stock purchases.

Fixed capital is associated with equity financing, while working capital is associated with debt financing.

Which of the following businesses is likely to require a larger amount of fixed capital?

A small bakery selling fresh bread and pastries.

A software development startup.

A freelance graphic design studio.

Why are public deposits considered a good source of medium-term finance?

Public deposits have a long maturity period.

Public deposits are obtained from financial institutions.

Public deposits are readily available from friends and family.

Public deposits are ideal for short-term financial needs.

What is the primary difference between equity shares and preference shares?

Equity shareholders have no voting rights, while preference shareholders do.

Equity shareholders receive a fixed rate of dividend, while preference shareholders do not.

Equity shareholders have a priority claim on the company's assets, while preference shareholders do not.

Equity shareholders bear the highest risk in the company, while preference shareholders have lower risk.

Under which condition is debt financing from financial institutions a suitable option for entrepreneurs?

When the entrepreneur wants to maintain full ownership of the business.

When the entrepreneur requires funds for short-term expenses.

When the government offers financial incentives for debt financing.

When other commercial banks are readily available for loans.

What is the main advantage of asset/lease financing for entrepreneurs?

It allows entrepreneurs to raise funds without collateral.

It provides funds that are directly related to sales and profits.

It offers lower interest rates compared to other forms of financing.

It involves sharing ownership of assets with the financing institution.

When is venture capital financing typically sought by entrepreneurs?

During the initial stages of business development.

When the business is in a low-risk industry.

When entrepreneurs want to avoid sharing ownership.

When government grants are readily available.

What is the key feature of working capital?

It includes long-term assets like land and machinery.

It is primarily used for purchasing fixed assets.

It covers short-term operational expenses.

It remains constant throughout the business cycle.

How do preference shares differ from equity shares in terms of dividend payment?

Preference shares have a fixed rate of dividend, while equity shares do not receive any dividend.

Preference shares receive a variable dividend based on profits, while equity shares receive a fixed dividend.

Preference shares have no entitlement to dividends, while equity shares always receive a dividend.

Preference shares and equity shares both receive a fixed dividend.

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