Business Studies

Business Finance

Easy

Financial leverage is associated with which of the following?

(A) $\frac{\text{Debt}}{\text{Debt + Capital}}$

(B) $\frac{\text{Debt}}{\text{Equity}}$

(C) $\frac{\text{Equity}}{\text{Debt + Capital}}$

(D) $\frac{\text{Debt}}{\text{Debt + Equity}}$

Choose the correct answer from the options given below:

(A), (B) and (D) only

(A) and (C) only

(A), (C) and (D) only

(B) and (D) only

✅ Correct Option: 4

Option 1 -> (A), (B) and (D) only - These formulas represent standard financial leverage ratios: debt-to-capital, debt-to-equity, and debt ratio respectively, hence it is incorrect.

Option 2 -> (A) and (C) only - Incorrect because (C) measures equity proportion, not debt leverage, while (D) is a valid leverage measure that's excluded.

Option 3 -> (A), (C) and (D) only - Incorrect because (C) calculates equity proportion rather than financial leverage, while valid leverage measure (B) is excluded.

Option 4 -> (B) and (D) only - Is correct

Hence, Answer is option 4.

2025: 31 May Shift 1

Identify the incorrect statement related to the decision of investing in a land by the company, from the options given below:

2025: 24 May Shift 1

Match List-I with List-II

List-I	List-II
(A) Net Working Capital	(I) Investments in long term assets.
(B) Fixed capital decision	(II) Proportion of debt in the overall capital.
(C) Financial Leverage	(III) Excess of current assets over current liabilities
(D) Trading on equity	(IV) Increase in profit earned by the equity shareholders due to the presence of fixed financial charges.

Choose the correct answer from the options given below:

2025: 30 May Shift 2

Which of the following factors affects capital budgeting decisions?

(A) Cash flows of the project

(B) The investment criteria involved

(D) Level of competition

Choose the correct answer from the options given below:

2026: 21 May Shift 2

Match the LIST-I with LIST-II

LIST-I (Decision)	LIST-II (Factors affecting the decision)
A. Financing Decision	I. Interest Coverage Ratio (ICR)
B. Dividend Decision	II. Cash Flow Position of the Company
C. Capital Structure	III. Choice of Technique
D. Fixed Capital	IV. Shareholders' Preference

Choose the correct answer from the options given below:

2025: 15 May Shift 1

There is an increase in profit earned by equity shareholders because of the presence of fixed financial charges. This concept is:

2026: 23 May Shift 2

____________________ aims at reducing the cost of funds procured, keeping the risk under control and achieving effective deployment of such funds

Solution

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CUET Business Studies Past Year Questions (Topic-Wise)