Kovaipudur, Coimbatore – 42.
2022 - 2023
BUSINESS STUDIES (SOURCES OF BUSINESS FINANCE)
Name : _______________ Std / Sec : XI____
1. Define a share. What are the two types of shares? Explain two features of each.
2. ICD’s are issued by:-
a) Bank
b) RBI
c) Company to another
d) SIDBI
3. Name and explain the source of finance which is popularly known as self-financing or
ploughing back of profits.
4. Finance invested in fixed assets is known as working capital. (True/False).
5. Neha Ltd. sells goods on credit and Mr. Sidhu sells goods on cash basis. Which concern
requires more fixed capital?
6. Why are equity shareholders known as ‘residual owners’?
7. What are the preferential rights enjoyed by preference shareholders?
8. Narayan Traders Ltd. is a company that deals in the wholesale business of rice. The finance
manager of the company Mr. Radheshyam Das arranges unsecured short-term finance for the
company. The rate of interest to be paid on this finance is more than the bank's rate of interest.
Identify the source of finance.
9. Fashion Hut, a reputed garments manufacturing unit needs to meet its day-to-day expenses
like wages, rent, maintaining stock of raw material, etc. The owner approaches the supplier of
the raw materials to give credit for two months, so that he can get cloth for making garments
without making immediate payment. The supplier made an enquiry regarding the business
organization and found that its reputation was very good. So it extended two months credit to
it. Identify the source of finance discussed above.
10. C Ltd. is planning to modernize its plant with latest technology. The company is not having
sufficient money. The finance manager plans to arrange money for 3 years since after that the
company is expecting a good return on investment. The finance manager does not want to
spend on floatation costs on issue of shares or debentures. Identify the suitable source of
finance for the company.
11. Pranav Udyog Ltd. is a company manufacturing electric devices. The company's financial
manager, Mr. Dhruv, in order to fulfill the long-term financial need, wants to raise the
cheapest source of finance. Identify the source of finance.
12. Shubham Ltd. has decided to expand its production capacity by modernizing its plant and
machinery at an estimated cost of 2 crore. It does not have adequate reserves to finance the
expansion. Suggest any sources of finance for the company.
13. Madhav Sales Pvt. Ltd. owns the agency of different food products, which sells goods of
different brands to retailers after purchasing them from several companies. It purchases
almost all goods for cash while its all sales are on credit of one month. So the company keeps
struggling with the short term finance. To overcome this problem, the company's finance
department held a meeting. The chairperson of the meeting asked the members to express
their views on the solution of this problem. The first person said, "We should use a source of
finance which does not involve any bureaucracy and legal problems and the market of which
maintains secrecy." The second person's opinion was that the company often needs cash credit
and overdraft. Therefore, the source of finance should selected considering this fact. The view
of the third person was that the company also should buy goods on credit. The chairperson of
the meeting listened to the suggestions of all and, to take the final decision, asked them to be
present in a meeting the next week.
Quoting the relevant lines from the above para, identify and explain the sources of finance as
suggested by different persons.
14. Shobhit has ₹50,000 for investment purposes. Should he invest in equity shares, preference
shares, public deposits or debentures? Justify your answer.
