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 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 2: Financial Statements and Analysis
Short Questions Answers 1. Who are some of the basic users of financial statements and how do they use them? Financial statements contain a balance sheet, income statement, cash flow statement and the statement of retained earnings of a firm. Various stakeholders use the firm’s financial statement. The basic users of financial statements are shareholders, […]