Anand Ltd. was running a successful business of manufacturing and selling electric bulbs, decided to diversify in the field of electric cables. For this, it needed to install a new plant the minimum cost of which was Rs 2 crores. It had retained earnings amounting to Rs 50 lakh but the rest was to be raised from the market. The finance manager was given the responsibility to decide the different sources from where the remaining financial requirement could be fulfilled. [6]
(a) Which financial decisions are involved in the above case ?
(b) Discuss two factors each to be considered for the above mentioned financial decisions.
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A) Working Capital/Short-term Investment Decision. It refers to the amount of capital required to meet day- to-day running of business. ...
B)Internal factors affecting financial decisions include nature of the business, the size of business, expected return, the cost and risk involved, the asset structure of the business, the structure of ownership, the expectations of investors, the age of the firm, the liquidity in company funds and its working capital ..
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