BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Market price of shares
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Cost of capital
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Both (a) and (b)
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None of these
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Detailed explanation-1: -Decision on Financing A financial decision includes the amount of money to be raised from various long-term funding sources such as equity shares, preference shares, debentures, bank loans, and so on. This is referred to as a funding decision. In other words, it is a decision on the company’s ‘capital structure.
Detailed explanation-2: -What are Financing Decisions? Financing decisions refer to the decisions that companies need to take regarding what proportion of equity and debt capital to have in their capital structure. This plays a very important role vis-a-vis financing its assets, investment-related decisions, and shareholder value creation.
Detailed explanation-3: -(i) Cost. (ii) Cash flow position of business. (iii) Level of fixed operating cost and. (iv) Control considerations.