CUET Business Studies: Business StudiesBusiness Finance. Free, no login required.

Q1:

2025: 22 May Shift 2

Business Finance

Easy

Passage 1: Detrimental debt

On the basis of this passage, answer the questions from Q. No. 41 to Q. No. 45

Even successful businesses have debt, but how much is too much? Learning how to manage debt is what can put you ahead. Taking on the right amount of debt can mean the difference between a business struggling to survive and one that can respond nimbly to changing economic or market conditions. A number of circumstances may justify acquiring debt. As a general rule, borrowing makes the most sense when you need to bolster cash flow or finance growth or expansion. But while debt can provide the leverage you need to grow, too much debt can strangle your business. So the question is: How much debt is too much?

A business that doesn't grow dies. You've got to grow, but you've got to grow within the financial constraints of your business. What is the ideal capital structure a business needs in its industry to remain viable? The higher the volatility (in your industry), the less debt you should have. The smaller the volatility, the more debt you can afford. Consider the capital structure of a growing company, NextGen Ltd.

Total Funds used Rs. 30 Lakh

Interest rate is 10% p.a.

Tax rate 30%

EBIT Rs. 4 Lakh

Nextgen Ltd. has an option to raise different amounts of debt:

Situation I :No Debt

Situation II:Rs. 10 Lakh Debt

Situation III:Rs. 20 Lakh Debt

What does the term "Capital Structure" imply?

Answer options
Option 4
Correct Answer
Explanation for 2025: 22 May Shift 2 BST question 1

Q2:

2025: 22 May Shift 2

Business Finance

Easy

Passage 1: Detrimental debt

On the basis of this passage, answer the questions from Q. No. 41 to Q. No. 45

Even successful businesses have debt, but how much is too much? Learning how to manage debt is what can put you ahead. Taking on the right amount of debt can mean the difference between a business struggling to survive and one that can respond nimbly to changing economic or market conditions. A number of circumstances may justify acquiring debt. As a general rule, borrowing makes the most sense when you need to bolster cash flow or finance growth or expansion. But while debt can provide the leverage you need to grow, too much debt can strangle your business. So the question is: How much debt is too much?

A business that doesn't grow dies. You've got to grow, but you've got to grow within the financial constraints of your business. What is the ideal capital structure a business needs in its industry to remain viable? The higher the volatility (in your industry), the less debt you should have. The smaller the volatility, the more debt you can afford. Consider the capital structure of a growing company, NextGen Ltd.

Total Funds used Rs. 30 Lakh

Interest rate is 10% p.a.

Tax rate 30%

EBIT Rs. 4 Lakh

Nextgen Ltd. has an option to raise different amounts of debt:

Situation I :No Debt

Situation II:Rs. 10 Lakh Debt

Situation III:Rs. 20 Lakh Debt

What does EBIT stands for:

Answer options
Option 2
Correct Answer
Explanation for 2025: 22 May Shift 2 BST question 2

Q3:

2025: 22 May Shift 1

Business Finance

Easy

The objective of financial management is to maximize the current price of equity shares of the company. This concept is:

Answer options
Option 2
Correct Answer
Explanation for 2025: 22 May Shift 1 BST question 3

Q4:

2025: 22 May Shift 1

Business Finance

Easy

Making an investment in long term asset is related to:

Answer options
Option 3
Correct Answer
Explanation for 2025: 22 May Shift 1 BST question 4

Q5:

2025: 22 May Shift 1

Business Finance

Easy

Which of the following capital is required for funding the day-to-day operations of the business?

Answer options
Option 3
Correct Answer
Explanation for 2025: 22 May Shift 1 BST question 5

Q6:

2025: 21 May Shift 1

Business Finance

Easy

The mix between debt and owners fund is known as:

Answer options
Option 4
Correct Answer
Explanation for 2025: 21 May Shift 1 BST question 6

Q7:

2025: 21 May Shift 1

Business Finance

Easy

Which of the following are the objectives of Financial Planning?

(A) To ensure availability of funds whenever required.

(B) To see that the firm does not raise funds unnecessarily.

(C) Helps to cope with business shocks.

(D) Helps in minimizing cost of production.

Choose the correct answer from the options given below:

Answer options
Option 2
Correct Answer
Explanation for 2025: 21 May Shift 1 BST question 7

Q8:

2025: 21 May Shift 1

Business Finance

Medium

Other things remaining the same, an increase in the tax rate on corporate profits will:

Answer options
Option 1
Correct Answer
Explanation for 2025: 21 May Shift 1 BST question 8

Q9:

2025: 16 May Shift 1

Business Finance

Medium

Capital structure refers to the mix of own and borrowed funds. The factors affecting the choice of capital structure are:

(A) Business Cycle

(B) Cost of debt

(C) Return on Investment

(D) Cost of Equity

Choose the correct answer from the options given below:

Answer options
Option 4
Correct Answer
Explanation for 2025: 16 May Shift 1 BST question 9

Q10:

2025: 16 May Shift 1

Business Finance

Medium

The impact of financial leverage on the profitability of a business can be seen through:

Answer options

Q11:

2025: 16 May Shift 1

Business Finance

Easy

Which of the following is not a decision in financial management?

Answer options

Q12:

2025: 16 May Shift 1

Business Finance

Medium

Which of the following statements are correct?

(A) Deciding about the capital structure of a firm involves determining the relative proportion of various types of funds.

(B) Capital structure decision is essentially affected by the regulatory framework provided by the law.

(C) Capital structure depends on factors like cash flow position, Return on Investment, Cost of debt & Equity etc.

(D) Capital structure refers to the mix between reserves and borrowed funds.

Choose the correct answer from the options given below:

Answer options

Q13:

2025: 16 May Shift 1

Business Finance

Medium

Match List-I with List-II

List-IList-II
(A) EBIT-EPS(I) Credit availed
(B) Fixed capital decision(II) Financial leverage
(C) Working capital Decision(III) Capital Structure
(D) Cost of equity and debt(IV) Financing alternatives

Choose the correct answer from the options given below:

Answer options

Q14:

2025: 15 May Shift 2

Business Finance

Easy

Which financial decision relates to committing the company's finances on a long term basis to different assets?

Answer options

Q15:

2025: 15 May Shift 2

Business Finance

Medium

The factors affecting choice of capital structure are:

  1. Cash flow position
  2. Tax Rate
  3. Nature of Business
  4. Cost of debt

Choose the correct answer from the options given below:

Answer options

Q16:

2025: 15 May Shift 2

Business Finance

Medium

Match List-I with List-II

List-IList-II
(A) Mix between owners fund and borrowed fund(I) Financial risk
(B) Inability of business to meet its obligation of payment of interest(II) Capital structure
(C) Proportion of debt and equity in overall capital(III) Capital budgeting decision
(D) Decisions that affect the amount of assets, competitiveness and profitability of business(IV) Financial leverage

Choose the correct answer from the options given below:

Answer options

Q17:

2025: 15 May Shift 2

Business Finance

Easy

__________ ensures availability of finance whenever needed.

Answer options

Q18:

2025: 15 May Shift 2

Business Finance

Medium

Factors affecting the working capital requirement are:

(A) Nature of Business

(B) Seasonal factors

(C) Credit availed

(D) Stock market conditions

Choose the correct answer from the options given below:

Answer options

Q19:

2025: 15 May Shift 2

Business Finance

Easy

Name the Financial Decision which determines the capital structure of the company.

Answer options

Q20:

2025: 15 May Shift 2

Business Finance

Easy

The factors affecting capital structure decisions are:

(A) Fiscal policy

(B) Stock market conditions

(C) Control

(D) Risk considerations

Choose the correct answer from the options given below:

Answer options

Q21:

2025: 15 May Shift 1

Business Finance

Easy

A firm is facing difficulties managing the expenses of day-to-day operations. Which decision has the company ignored here?

Answer options

Q22:

2025: 15 May Shift 1

Business Finance

Medium

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

Answer options

Q23:

2025: 15 May Shift 1

Business Finance

Easy

The primary aim of financial management is:

Answer options

Q24:

2025: 15 May Shift 1

Business Finance

Easy

The optimal combination of various sources of funds for a business is called:

Answer options

Q25:

2025: 14 May Shift 2

Business Finance

Medium

The CFO of a company wants to change the capital structure of the company. Identify the factors which affect the choice of capital structure.

(A) Stock Market Condition

(B) Tax Rate

(C) Cost of Equity

(D) Level of Competition

Choose the correct answer from the options given below:

Answer options

Q26:

2025: 14 May Shift 2

Business Finance

Easy

Financial leverage is associated with which of the following?

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

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

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

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

Choose the correct answer from the options given below:

Answer options

Q28:

2025: 14 May Shift 2

Business Finance

Medium

Match List-I with List-II

List-IList-II
DecisionActivity
------
(A) Long-term Investment Decision(I) Choice of Technique
(B) Working Capital Decision(II) Cash Management
(C) Fixed Capital Decision(III) Raising capital by issuing shares/debentures
(D) Financing Decision(IV) Capital Budgeting

Choose the correct answer from the options given below:

Answer options

Q29:

2025: 14 May Shift 2

Business Finance

Easy

Which of the following is an important factor to be considered in long-term investment decisions?

Answer options

Q30:

2025: 14 May Shift 2

Business Finance

Easy

Which of the following is NOT a factor affecting working capital requirements?

Answer options