Medium

Arun wants to open a retail mart. He is thinking over the selection of the best financing alternative. He made an estimation that Rs. 40 lakhs, is an adequate amount of money to start the venture. He is planning to finance the business by investing Rs. 25 lakhs of his own money and the rest would be financed by debts. He is very careful about the future cash-flow in the business because the cost of raising funds from external sources is significant. He is working out to ensure that enough funds are available at the right time. If adequate funds are not available, the firm will not be able to honour its commitments and carry out its plans. On the other hand, if excess funds are available, it will unnecessarily add to the cost and may encourage wasteful expenditure. Since it will be a trading business, it needs lower investment in fixed assets. Since Arun is planning to initiate the business from a small level, the quantum of inventory and debtors required is generally low.

What is the major issue in the case?

Business Finance

Marketing Management

Organisational Structure

Leadership

✅ Correct Option: 1

Option 1 -> This deals with financial planning, capital management, funding decisions, and resource allocation - which appears to be the central concern in this case. Option 2 -> This focuses on product promotion, market positioning, and customer acquisition strategies - not the primary focus here. Option 3 -> This relates to how the company is structured hierarchically and departmentally - not the main issue being addressed. Option 4 -> This concerns management style, decision-making, and people guidance - while important, not the core problem in this scenario. Hence, Option 1: Business Finance -> The case primarily revolves around financial challenges such as funding requirements, capital structure decisions, cash flow management, or investment analysis, making Business Finance the major issue that needs to be addressed -> correct

Question 41

"Since it will be a trading business, it needs lower investment in fixed assets." Which factor is highlighted by the aforesaid statement?

Question 42

"Since Arun is planning to initiate the business from a small level, the quantum of inventory and debtors required is generally low." Which factor is highlighted by the aforesaid statement?

Question 43

What would be the total capital requirement of the business?

Question 44

"He is working out to ensure that enough funds are available at right time." The above statement indicates that Arun is involved in:

What is the major issue in the case?

Solution

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CUET Business Studies Past Year Questions (Topic-Wise)