Very Short Question Answer 1. What do you mean by suitability of strategic alternatives? Suitability emphasizes the strategic fit with the environmental factors. It assesses how the identified strategic alternative would sustain or improve the competitive position of the organization. It can be referred as consistency test. 2. What do you mean by feasibility of […]
Chapter 12: Strategic Options
Very Short Questions Answer 1. What do you mean by corporate strategy? Corporate strategy is the master strategy for an organization. It follows the vision and mission of an organization. A corporate strategy involves selecting and managing a group of different businesses which are competing in different product markets to gain competitive advantage. 2. Enlist […]
Chapter 11: Evaluating Company Resources And Competitive Capabilities
Very Short Questions Answer 1. What is threshold resource? Threshold resources are those capabilities needed for an organization to meet the necessary requirement to compete in a given market. These are the fundamental resources. Without these resources, an organization cannot run smoothly. 2. Define competitive advantage. Competitive advantage may be defined as the advantage over […]
Chapter 11: Working Capital Management
Short Questions Answers 1. What do you understand by working capital cash flow cycle? How do you measure it? How can it be shortened? Firm’s liquidity has two major aspects: ongoing liquidity and protective liquidity. Ongoing liquidity refers to the inflow and outflows of cash through the firm as the product acquisition, production, sales, payment […]
Chapter 10: Dividend Policy
Short Question Answer 1) What are the factors influencing dividend policy? Dividend policy of a firm is influenced by many factors. Some major factors are explained below: Legal requirements: Certain conditions imposed by law restrict the dividend payment. For example, dividends should not exceed the sum of current earnings and past accumulated earnings; accumulated loss […]
Chapter 9: Capital Structure and Leverage
Short Questions Answers Write short notes on: i) Implications of business and financial risks Business risk is the riskiness on a firm’s stock provided that the firm has used no debt capital. It is the risk inherent in the operation of the business. A firm’s business risk arises because of uncertainty associated with projections of […]
Chapter 8: The Basics of Capital Budgeting
Short Question Answer 1. Briefly explain relative merits and demerits of different methods of evaluating capital budgeting projects. Capital budgeting projects are evaluated using non-discounted and discounted cash flow methods. Non discounted cash flow method includes the ranking criteria such as payback period and accounting rate of return, whereas the non-discounted cash flow method includes […]
Chapter 7: Cost of Capital
Short Question Answer 1. What is the significance of marginal cost of capital in decision making? Explain. Marginal cost of capital is the cost of raising an additional rupee of capital. In other words, it is the cost incurred for raising incremental funds. Thus, the weighted average cost of incremental capital is known as the […]
Chapter 6: Stock Valuation
Short Question Answer 1. What are the characteristic features of preference share? Preferred stock is a hybrid security issued by companies. It is called hybrid security because it has some features common to debt and others similar to common stock. The rate of dividend to be paid on preferred stock is fixed and it generally […]
Chapter 5: Bond Valuation
Short Questions Answers 1. What are the key features of bond? Explain. A bond is a long-term promissory note issued by corporations. It is called a promissory note because the issuer promises to pay a stated amount of interest regularly and repay the maturity value at the expiry of the maturity period. While issuing bonds, […]