Question

‘G Motors’ is the manufacturer of sophisticated cranes. The production manager of the company, reported to the CEO, Ashish Jain that one of the machines used in manufacturing sophisticated cranes had to be replaced to compete in the market, as other competitors were using automatic machines for manufacturing cranes. After a detailed analysis, it was decided to purchase a new automatic machine having the latest technology. It was also decided to finance this machine through long-term sources of finance. Ashish Jain compared various machines and decided to invest in the machine which would yield the maximum returns to its investors. a) Identify and explain the financial decision taken by Ashish Jain. b) Explain any two factors affecting the decision identified in (a) above

Answer 1

Answer:

Business concerns requires two types of finance which are:

1. Long term  finance : This are the finance which are contributed by the owners and long term creditors of the enterprise. The finance is also known as capital finance. Examples- Equity shares, debentures etc.  

2. Short term finance : This are the finance which are generated from the outsiders to meet the day to day affairs of the business. Examples- Public deposits, bank loan etc.  

Explanation:

Answer 2

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