Questions on Source of Business Finance | Worksheet on Business Studies Class 11

Questions on Source of Business Finance | Worksheet on Business Studies Class 11

1. Define business finance.
2. Why is finance called lifeblood of any business? Give reasons for your answer.
3. State any four differences between owner's funds and borrowed funds.
4. Give any two examples of owner's funds.
5. Give any two examples of borrowed funds.
6. Which source of finance is referred to in the phrase 'ploughing back of profits'?
7. Name the types of shares.
8. What are the preferential rights given to preference shares over equity shares?
9. Why are equity shareholders called residual owners?
10. State any five differences between shares and debentures. 
11. What is the full form of GDR, ADR and IDR?
12. Explain GDRs in brief.
13. ADRs are issued to citizens of _____.
14. IDRs are issued to citizens of _____.
15. State any one difference between GDR and ADR. 
16. Give any two examples of financial institutions.
17. Why are financial institutions also known as development banks?
18. The directors of a company have decided to expand business activities by purchasing machinery and equipments worth Rs 10 crores. As a finance manager, advise the directors about the various sources of finance available to the company. 
19. A company needs funds of Rs 25 lakhs to increase its stock of raw materials and finished goods. Which sources of finance would be suitable to the company for this purpose?
20. Akshay Ltd. wants to raise money from international capital market. Discuss the sources which the company can use for this purpose. 
21. Babbu Ltd. is a well known manufacturer of toys. Recently, the company was short of funds for meeting its day-to-day expenses. So, the company approached one of its suppliers to grant 30 days credit on purchase of raw material. On the basis of creditworthiness of Babbu Ltd, the supplier granted the credit. Identify the source of finance highlighted in the given case.
22. Karan had aspired to start a food restaurant from his childhood. On completing his education he shared his childhood dream with his father. Therefore, the father-son duo decided to approach a nearby bank for obtaining a loan. His father's foremost concern was to raise finance for the business as his savings would be insufficient for starting a business. The two sources of funds on the basis of ownership are being discussed above. Identify and differentiate between them by giving any two suitable points.
23. Identify the source of finance highlighted in the following case : a. It is also known as ploughing back of profit. b. It facilitates the purchase of goods and services without making immediate payment.  
24. A company needs additional funds for expansion. The company does not want to bear any floatation costs or any fixed financial charges like interest or dividend. Also, equity shareholders insist not to issue further shares as there is risk of dilution of control. Suggest and explain the source of finance most suitable for the company.
25. NTB bearings Ltd. was the first company to manufacture needle roller bearings in India. For over 40 years NTB bearings Ltd has pioneered the leading edge of bearing     technology and today over most of the vehicles on Indian roads run on NTB parts. The directors of NTB Bearings Ltd. want to modernize their plant and machinery with latest technology at the cost of ₹ 50 lakhs. They approached an organisation which will not only provide financial assistance but also best technical advice from where the machinery can be imported. On the basis of aforesaid information about NTB Bearings Ltd, identify and explain the source of finance used by company to meet its funds requirement.