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Match List-I with List-II

List-I (Factors affecting decisions)List-II (Decision)
(A) Stability of Earnings(I) Financing decision
(B) Fixed Operating Costs(II) Dividend decision
(C) Diversification(III) Fixed Capital decision
(D) Production Cycle(IV) Working Capital decision

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 4

Stability of earnings affects the dividend decision, so (A)-(II). Fixed operating costs affect the financing decision through the extent of debt a firm can bear, so (B)-(I). Diversification increases fixed capital requirements, so (C)-(III). Length of the production cycle affects working capital requirements, so (D)-(IV). Hence (A)-(II), (B)-(I), (C)-(III), (D)-(IV).

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