CBSE Class 12 Business Studies Revision Notes Chapter 9

Class 12 Business Studies Chapter 9 Notes

NCERT Business Studies for Commerce Class 12th is a collection of great chapters that attempts to improve understanding of all elements of business and organisation. It educates students on how to run a company and where they should concentrate their efforts. The ninth chapter of Business Studies in Class 12 is Financial Management. The team of Extramarks experts have created Business Studies Class 12 chapter 9 notes to help the students prepare for the forthcoming board examinations. 

Business Studies Class 12 notes chapter 9 Financial Management have been provided with straightforward language and step by step explanations. These notes are beneficial for students in quickly understanding the chapter. Not limiting themselves to just class 12 Business Studies chapter 9 notes, students may access several additional study materials on the Extramarks website. All materials, including NCERT book answers, CBSE revision notes, CBSE sample papers, CBSE previous year question papers, and so on, are available to students.

Key Topics Covered in Class 12 Business Studies Chapter 9 Notes

The key topics covered under class 12 Business Studies chapter 9 notes include:

BUSINESS FINANCE MEANS:

Money or funds available for a firm’s activities are referred to as business finance. It is necessary for the survival and expansion of a firm, the manufacture and distribution of goods and for the payment of day-to-day expenditures. Funds are needed to start a firm, operate it, modernise and expand it, or diversify. 

1. FINANCIAL MANAGEMENT 

This section of class 12 Business Studies chapter 9 notes covers the following aspects.

• The focus of Financial Management is the correct acquisition and use of funds. It covers corporate actions like obtaining finances, lowering the cost of financing, managing risk, and deploying those assets.
• The two dimensions of financial management are finance and management. As a result, financial management may be defined as the application of management activities in a firm’s finance department, notably planning and controlling operations.
• Financial management is vital since it directly impacts a company’s financial health. Financial management decisions affect all financial statement items, whether directly or indirectly.

Students may refer to chapter 9 Business Studies class 12 notes prepared by the subject experts and provide a detailed explanation of the topic.

IMPORTANCE OF FINANCIAL MANAGEMENT

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• The size and composition of the company’s fixed assets: Overinvestment in fixed assets may stifle money and expand the size of fixed assets, which isn’t good for the company, but underinvestment can suppress growth.
• The net amount of current assets, broken down into cash, inventories, and receivables: The quantity of working capital required by a firm is influenced by financial decisions such as fixed asset investments, credit policy, inventory management, etc.
• Breaking down long-term funding into debt, equity, and other forms: A financial manager needs to determine how a corporation’s debt and/or equity proportions must be pumped in. Finance managers’ actions impact debt, equity share capital, and preference share capital and are essential for financing management.
• The amount of long- and short-term finance that will be employed is as follows: The percentage of cash obtained from long-term and short-term sources is determined by the financing choice.
• All profit and loss account items: Financing decisions have an impact on the value of profit and loss account items.

All financial decisions made by financial managers in the past have a significant impact on present and future financial decisions. The quality of financial management determines the overall health of finance. Students may refer to Extramarks class 12 Business Studies chapter 9 notes to get the pointwise explanation of the chapter.

OBJECTIVES OF FINANCIAL MANAGEMENT

The objectives of financial management covered under Extramarks class 12 Business Studies chapter 9 notes include

• Maximisation of Profit: The major goal of companies concerned with raising their earnings per share (EPS) is to achieve profit maximisation. It is also one of the classic financial management objectives, which emphasises the idea that all financial efforts should be made to enhance the company’s total profit.
• Maximisation of Wealth: The primary goal of financial management is to maximise shareholders’ wealth, commonly known as wealth maximisation. This goal focuses on boosting the company’s total shareholder wealth by targeting finance efforts toward growing the company’s share price. The wealth of the shareholders’ increases as the share price rises. In this case, financial management’s purpose is to maximise the current value of the company’s stock. The company’s financial actions have a significant impact on the market price of its shares.
• Shareholders benefit from a growth in the market value of their stock: It focuses on making financial decisions that add value to the firm, resulting in an increase in the price of the equity share. Other objectives, such as optimal money use, liquidity maintenance, and so on, are naturally achieved as this core goal is met. It entails deciding on the most effective option that will prove to be advantageous.
• Some other Objectives: Other goals might include making the best use of financial resources, selecting the best source, enabling simple access to money at reasonable prices, and so on.

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2. FINANCIAL DECISIONS

Browse Extramarks for easy access to class 12 Business Studies chapter 9 notes. One of the most significant decisions that an organisation’s finance managers make is financial decision-making. The three significant decisions made by the firm determine and affect the company’s financial decisions:

1. INVESTMENT DECISIONS:

This section of class 12 Business Studies chapter 9 notes gives a brief on investment decisions. 

• A company should determine where to invest its cash in order to maximise its profits. These are known as investment decisions, and they may be divided into two categories: long-term and short-term investment decisions.
• The many resources available to an organisation are limited and can be used in other ways. A company must adequately determine where to invest in order to maximise earnings.
• Investment choices are those made concerning how the firm’s finances are invested in various assets or various investment ideas.

Get your hands on Extramarks Class 12 Business Studies Chapter 9 Notes for the comprehensible and handy notes made by the subject experts.

Investment Decisions can be Long-run and Short-run: 

1. Long-Run Investment Decisions:

• Examples of long-term investment decisions are purchasing a new fixed asset, machinery, or land.
• Capital budgeting decisions are another name for them. It impacts a company’s long-term earning potential and profitability, as well as long-term business ramifications.
• Furthermore, because such investment includes a significant sum of money, it is difficult to reverse such decisions.
• For example, whether to buy a new fixed asset or create a new branch.

2. Short Run Investment Decisions:

• These are also known as working capital choices, and they have an impact on day-to-day operations.
• It also affects a company’s liquidity and profitability.
• For instance, decisions on financial management, inventory management, and so forth.

Factors Affecting Capital Budgeting Decisions

There are many projects and businesses accessible for investment in the market. It is essential to effectively examine each business in order to determine its profitability and return on investment. Extramarks class 12 Business Studies chapter 9 notes to get easy and quick access to handy notes. The following are some of the factors that influence decisions:

• The project’s cash flow: It’s critical to examine the pattern of cash flows over time in terms of inflows and outflows.
• Rate of Return: One of the most crucial aspects to examine before investing in any enterprise is the rate of return. These are determined by the predicted rewards and the level of risk associated with each proposal.
• The investing criteria: It is essential to consider various investment options by taking into account elements such as interest rate, cash flow, and so on.

2. FINANCING DECISIONS:

This section of class 12 Business Studies chapter 9 notes explains the following.

• Financing decisions entail determining the amount of money to be raised from various sources.
• Identification of financial sources is also part of these decisions.
• There are two basic ways to get money: from shareholders (equity) and borrowed money (debt).
• A corporation must choose the best combination of debt and equity-based on cost, risk, and profitability.
• While debt is less expensive than equity, it comes with a higher financial risk.
• Financial decisions must be made carefully since they affect the firm’s total cost of capital and include financial risk.
• In most cases, a combination of debt and equity money is favourable to the organisation.

Extramarks provides students with Class 12 Business Studies Chapter 9 Notes that have been prepared by the subject experts using simple language with precision. 

Difference between equity and debt as a source of finance.

Factors Affecting the Financial Decisions

• Risk: Each source of funding has a different level of risk. However, funds with a moderate to low-risk profile are preferred.
• Cost: When picking a funding source, the cost of acquiring cash is an important issue to consider. In most cases, the cheapest source of funds will be selected.
• Cash Flow Position: A company’s cash flow situation influences its selection when selecting a funding source. A corporation with high cash flow will invest in debt, whereas one with inadequate cash flow will invest in stock.
• Floatation cost: The lower the floating price, the less appealing the source of funds.
• Fixed Operating cost: Those with a high fixed operating cost should avoid debt, but companies with lower financing costs can take on more debt. This is due to the fact that limited operational expenditures, such as a building or rent, need a significant amount of capital. As a result, the firm must avoid sources of funding that may increase its costs.
• Control considerations: Companies that do not want their degree of control to be diluted should invest in debt rather than equity. Investing in stock will erode management’s authority over the organisation.
• State of Capital market: The state of the capital market is also an important consideration when deciding on a funding source. When the market is bullish, more individuals invest in the stock, and when it is bearish, corporations find it harder to issue stock.

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3. DIVIDEND DECISIONS

Take a look at the elaborate topic of Dividend Decisions on Extramarks website under the section of class 12 Business Studies chapter 9 notes for better understanding.

• Dividend distribution choices are made when a company’s profit or excess is distributed.
• A dividend is that portion of a company’s profit that is delivered to shareholders.
• The corporation must decide whether to pay it as dividends to equity owners or to keep it as retained earnings.
• As a result, the most crucial issue is how much profit should be divided and how much should be kept in the firm.
• This choice is often made with the goal of maximising shareholder strength while also keeping earnings to boost the organisation’s future earning capability.

Factors Affecting Dividend Decisions

• Amount of earning: A company decides on dividends based on its current and previous earnings. The company would be better positioned to pay dividends if its profits were higher. In contrast, if a company’s earnings are poor, it will be able to pay lesser dividends.
• Stable dividends: In general, companies attempt to keep their payouts steady so they don’t fluctuate too much. When their earnings are consistently growing, they decide to enhance the payouts.
• Stable earning: A corporation with consistent or smooth earnings might pay more significant dividends to its stockholders than one with inconsistent or uneven earnings.
• Growth prospects: Companies with better growth prospects seek to keep a larger share of their profits for investing in the future. As a result, they pay lower dividends.
• Preference of shareholders: When deciding on dividends, shareholders’ preferences must be taken into account. For example, if the firm’s shareholders demand that a specific minimum amount of dividends be paid, the corporation is likely to do so.
• Cash Flow position: Dividend payments result in a cash outflow from the corporation. If a corporation has little cash (poor liquidity), it will pay fewer dividends. Similarly, if a corporation has a large amount of money inhand (high liquidity), it will pay higher dividends.
• Stock market reactions: The market price of a company’s shares is affected by dividend decisions. Investors react favourably when a firm declares more significant dividends and the stock price rises. On the other hand, a decrease in dividends would have a negative impact on a company’s stock price.
• Taxation policy: The government’s tax policy is an essential consideration when deciding whether or not to pay a dividend. For example, if the rate of taxes on dividend payments by corporations is high, the corporation may give fewer dividends.
• Access to capital market: Large organisations with better access to the financial market are less likely to rely on retained earnings to fund future projects.

As a result, they will most likely pay bigger dividends. On the other hand, with limited access to financial markets, small businesses are more likely to pay lesser dividends.

• Contractual constraints: A company’s dividend decisions may be restricted or shaped by a contractual arrangement with its lenders. Such agreements must be considered when deciding on dividends.
• Legal constraints: Companies are required to follow the Companies Act’s laws and policies. These regulations and policies must be carefully considered before making dividend decisions. Apart from these conditions, if the firm enters into a loan arrangement with the lender, the lender may impose certain limits on future dividend payments. The company must follow such restrictions.

Extramarks provides Class 12 Business Studies Chapter 9 Notes that give students pointwise point explanations of the chapter in detail. Browse through Extramarks for these handy notes.

3. FINANCIAL PLANNING

Financial planning means creating a blueprint for a company’s entire financial operations so that the appropriate quantity of cash is accessible for various operations at the appropriate time. Register with Extramarks to get access to class 12 Business Studies chapter 9 notes. These notes will prove handy for the students to prepare for their upcoming examinations. 

Main Objectives of Financial Planning

• Identifying potential funding sources and ensuring that the actual cash is available to the company as and when needed. This is accomplished through financial planning, which involves estimating the number of dollars necessary for various corporate activities. In addition, a time estimate is established for when the money will be required.
• To guarantee that money is utilised correctly, i.e., there is neither a surplus nor an insufficient amount of financing available to the company. In other words, it assures that neither an excess nor a shortfall of finances occurs. This is because, while insufficient finances block the business’s activities, enough financing causes the firm to squander money. As a result, competent financial planning guarantees that the firm’s money is used efficiently.

Importance of Financial Planning

This secretion of class 12 Business Studies chapter 9 notes defines the importance of financial planning. 

• Helps in facing eventual situations: Things that are about to happen are predicted. It helps a business better prepare itself to deal with future challenges. Prepares a blueprint portraying alternative scenarios and prepares management ahead of time to deal with a modified current situation.
• Helps in complete utilisation of funds: Helps in the elimination of waste, resulting in better financial management.
• Improves coordination: Helps in the coordination of a variety of corporate operations. Some examples are providing clear rules, regulations, and processes to coordinate the tasks of the sales, manufacturing, and finance divisions.
• Evaluating performance: It is simpler to analyse segment-wise company performance by providing precise business objectives and presenting financial projections for various business segments.
• Supports in avoiding surprises and shocks: Helps a corporation anticipate future shocks and surprises.
• Reduces duplicity and wastage: Detailed action plans assist in minimising waste and eliminating duplication of work.
• Works as a link: Attempts to bridge the present and future gap. Makes the connection between investment and finance decisions.

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DIFFERENCE BETWEEN FINANCIAL PLANNING AND FINANCIAL MANAGEMENT

Students may refer to Extramarks class 12 Business Studies chapter 9 notes to get easy access to handy notes. These notes help students in their forthcoming examinations. 

Financial Planning:

Under this section of class 12 Business Studies chapter 9 notes, the experts at Extramarks talk about the difference between financial planning and management by first defining financial planning.

• It is the process of projecting the number of finances that the company will require and identifying the sources from which these funds will be received.
• Financial planning strives to ensure smooth operations by balancing the need for finances with the availability of those funds.
• It is an element of financial management and has a limited scope.
• The goal is to guarantee that funds are available when needed and that excessive money soliciting is minimised.

Financial Management:

• It relates to the company’s efficient acquisition, allocation, and use of cash.
• Financial management aims to find the optimal investment option by weighing the respective costs and rewards.
• It has a broader application.
• The goal is to handle a variety of financial operations.

4. CAPITAL STRUCTURE

Register with Extramarks to get full access to class 12 Business Studies chapter 9 notes s. These notes are handy and highly helpful for the students. Let us now have a detailed look at the Capital structure:

• The term “capital structure” simply refers to a company’s utilisation of various financial sources to obtain cash.
• Borrowed funds and owner’s funds are the two primary sorts of funding sources.
• Borrowed money includes loans, bank borrowings, public deposits, and other forms of borrowing.
• Borrowed monies are sometimes referred to as debt.
• On the other hand, the owner’s money can take the shape of reserves, preference share capital, retained earnings, and so on. Owners’ finances are referred to as equity in general.
• As a result, capital structure may be simply defined as a company’s mix of debt and equity.
• A company’s capital structure has an impact on its profitability as well as its financial risk.
• As a result, it must be made after examining various factors.
• The company’s capital structure is determined by three primary factors: cost, risks, and returns.

1. Cost considerations: 

• Debt is a less expensive form of financing in comparison to equity. The cheap cost of the loan is due to the lenders’ assurance of a particular return amount, i.e. there is less risk. Low risk equates to a lower rate of return. The corporation will save money as a result of this. The interest that must be paid on debt is deductible.
• Equities are more costly than taxes because they include the cost of floating. Dividends to shareholders are also not tax-deductible (i.e. dividends are paid from profits after-tax).

2. Financial Risks: 

• A loan entails financial risk in the sense that the borrower is obligated to repay the debt in a set amount of time. Any failure to repay the loan might result in the company’s insolvency.
• There is no such risk in the case of stock because dividend payments to shareholders are not required.

3. Return: 

Debt provides a more extensive return since the differential between cost and return is more significant with debt. As a result, the profit per share is higher. As a result, while debt is less expensive and provides a better return, it also raises the company’s financial risk.

As a result, the capital structure selection must be made after thoroughly assessing the cost, return, and risk variables involved.

FACTORS AFFECTING CAPITAL STRUCTURE

Class 12 Business Studies chapter 9 notes give a clear insight on the factors that affect the choice of Capital Structure, which are as follows:

• Size of Business: Small firms prefer retained earnings and equity capital over debt or borrowed money because debt or borrowed capital has a fixed interest expense. On the other hand, large organisations do not have as much difficulty issuing debt, and they may obtain long-term financing from borrowed sources at a lower cost than small businesses.
• Cash Flow Position: Before obtaining funds, a company must analyse its projected cash flow to make sure that it will be able to meet its fixed financial commitments. A corporation with significant liquidity and a favourable cash flow situation can issue debt capital since it is less likely to face financial danger than a company with little cash.
• Tax Rate: The higher the tax rate, the more debt capital is preferred in the capital structure because interest on debt capital is a tax-deductible expenditure, making the loan cheaper.
• Interest Coverage Ratio implies the number of times a company’s income can cover its interest commitments, and a greater ICR lowers the risk of defaulting on interest payments.
• Cost of Debt: If a company has the ability to borrow cash at a cheaper interest rate, it can use debt to raise capital.
• Debt Service: It shows the company’s capacity to satisfy its financial commitments for interest and loan principal.
• Return of Investment: If a corporation produces a high rate of return, it has the option of using death as a source of funding.
• Cost of Equity: If a corporation has a high-risk profile, its shareholders may demand a high rate of return, which in turn will result in a higher cost of capital.
• Regulatory Framework: The standards for documentation procedures have an impact on the decision to use a specific source of funding.
• Floatation Cost: Choosing a funding source is determined by the cost of flotation to be spent to acquire such cash; the cost of flotation makes this programme less appealing.
• Flexibility: The loans chosen are determined by the company’s borrowing capacity and the amount of flexibility it wishes to maintain in selecting a future source of cash.
• Risk Consideration: A firm chooses debt as a source of capital based on its operational and overall business risks.
• Capital Structure of Other Companies: While the capital structure of other companies in the field can be used as an illustration when developing a company’s capital structure, the ultimate choice must be made based on the company’s ability to bear financial risk.
• Stock Market Conditions: In case the stock market is performing well and the economy is booming, corporations may decide to use more equity in their capital structure rather than debt. However, in the event of a downturn, corporations will choose more debt over equity in their capital structure to minimise further risks.

5. FIXED CAPITAL

Long-term assets are referred to as fixed capital. Allocating a firm’s money to various projects/assets is part of fixed capital management. Investment or capital budgeting choices are examples of such decisions. In the long run, these decisions have an impact on the company’s growth, profitability, and risk. Extramarks gives the entire class 12 Business Studies chapter 9 notes that the students can utilise in understanding the chapter pointwise.

Importance of Fixed Capital

• Irreversible decisions: The investment choice cannot be reversed without suffering significant losses and unnecessary expenses.
• Long term growth: Capital budgeting decisions have long-term implications for the company’s future development and profitability.
• The risk involved: Fixed capital investment and the associated financial risks have a long-term impact on real business risk.
• A large amount of funds involved: Capital budgeting decisions involving large sums of money stall for a long time.

Factors affecting the Fixed Capital

Extramarks Class 12 Business Studies Chapter 9 Notes throw light on all the factors affecting the requirement for fixed capital:

• The technique of production: When a corporation uses capital-intensive technology, it depends less on manual labour and has a higher need for fixed capital. A corporation built on labour-intensive technology, on the other hand, will require less fixed capital since it will spend less on fixed assets.
• Nature of business: The nature of a company’s business is a significant component in determining its capital requirements. A manufacturing firm, for example, has a higher fixed capital demand than a trading company.
• The scale of operation: Because large-scale corporations acquire more machinery and plants for their operations and demand more space, they require more fixed capital than small-scale enterprises.
• Technology upgradation: When a corporation undergoes rapid industrial upgrading, it will require more fixed capital to replace outdated machinery with new machinery in order to upgrade technology. While the process of upgrading will be slow, the amount of fixed capital required will be lower.
• Level of collaboration: Because they may share available machinery with their collaborators, companies who favour partnerships will require less fixed capital.
• Growth prospects: Companies that extend their activities in order to achieve higher growth will require more fixed capital than companies that do not.
• Availability of finance and leasing facility: Companies might avoid purchasing fixed assets if they are supplied with leasing options. As a result, the amount of fixed capital required is reduced.
• Diversification: Diversifying a company’s range of manufacturing operations will necessitate additional fixed capital to manufacture goods.

WORKING CAPITAL

Working capital is the amount employed in the day-to-day operations of a firm. Extramarks class 12 Business Studies chapter 9 notes provide a detailed explanation on the subject of working capital.

Two main concepts of Working Capital:

• Gross Working Capital: It simply implies putting money into current assets.
• Net Working Capital: It means the difference between current assets (cash on hand/in the bank, bills receivable, debtors, and so on) and current liabilities (obligatory payments which are due; for example, bills payable, outstanding expenses etc.).

Factors Affecting Working Capital

Class 12 Business Studies chapter 9 notes at Extramarks website presents a pointwise elaboration on the topic of factors affecting working capital.

• Types of Business: One of the most critical indicators of working capital requirements is the type of firm. Trading companies, for example, have shorter operational cycles since they do not process anything. As a result, they have a minimal working capital need.

On the other hand, a manufacturing company would require a considerable amount of operating capital. It is so because it has a long operational cycle, in which raw resources must first be turned into completed commodities before being sold.

• Fluctuations in Business Cycles: Working capital requirements vary depending on the stage of the business cycle. For example, both output and sales are greater during a boom period. As a result, the need for working capital is likewise considerable. In contrast, during a depression, demand is low, and hence output and sales are down. As a result, there is less of a need for operating capital.
• Production Cycle: The time between receiving products and processing them into finished items is referred to as the production cycle. Working capital requirements increase as a company’s production cycle lengthens, and vice versa. This is because a longer manufacturing cycle would demand more working capital due to increased inventory and other related expenditures.
• The scale of Operations: Companies with a larger scale of operation require more working capital than those with a smaller scale of operation. It is due to the fact that businesses with a larger scale of operations are forced to have a more extensive stock of goods and debtors. A firm with a lower scale of operation, on the other hand, requires less working capital.
• Credit Availed: Suppliers may grant credit to a company/firm based on their creditworthiness. The more credit they acquire, the less they need in terms of operating capital.
• Growth Prospects: Stronger production, sales, and inputs suggest higher growth potential. As a result, a company’s more significant growth potential necessitates a higher working capital level.
• Credit Allowed: The average duration for collecting sale profits is referred to as credit policy. This is dependent on the clients’ creditworthiness. As a result, a firm with a flexible lending policy will need greater working capital.
• Seasonal Factors: During the peak season, companies require a large amount of working capital due to the high level of activity. However, during the lean season, they demand less as the activities decrease.
• Availability of Raw Materials: Lower stock levels might suffice if raw supplies are readily available and consistent. This will assist the firm/company avoid the storage of a significant quantity of raw materials, hence lowering the requirement for working capital. However, if the time between making an order and receiving items grows, the firm will need to maintain a considerable amount of raw material stock, resulting in a higher working capital demand.
• Operating Efficiency: Companies with a high level of operating efficiency will require less working capital, whereas companies with a low level of efficiency will require more working capital. This is because efficiency can help a company/firm reduce the number of raw materials required, the average time finished goods inventory is held, and so on.
• Level of Competition: In order to produce items on time, the corporation will need bigger stockpiles of finished goods as the market becomes more competitive. As a result, they keep a larger inventory, which necessitates a significant amount of money.

Class 12 Business Studies Chapter 9 Notes: Chapter Summary

The class 12 Business Studies chapter 9 notes summary helps students in summarising the chapter and revising it for the examination.

• Business Finance: Business finance refers to the funds necessary to conduct business operations. Almost every company activity needs some form of funding. To start a firm, operate it, modernise it, expand it, and diversify it, you’ll need money.
• Financial Management: Financial management is related to the most efficient acquisition and use of funds. Different alternative sources of money are discovered and assessed in terms of costs and risks for effective purchase.
• Objectives and Financial Decisions: The wealth maximisation notion refers to the fundamental goal of financial management, which is to maximise shareholder wealth. The three main financial choices are tied to the market price of a company’s shares. Investment, financing, and dividend decisions are the three primary decisions that are involved in financial decision-making.
• Financial Planning and Importance: Financial planning is the process of creating a financial blueprint for a company’s future activities. Financial planning aims to guarantee that sufficient finances are accessible at the appropriate moment.

The following dual goals are pursued by financial planning:

• (a) To guarantee that funds are available whenever they are needed.
• (a) To ensure that the firm does not overextend its resources.

Financial planning is a crucial factor in every company’s overall strategy. Its goal is to help the corporation deal with the unpredictability of the availability and timeliness of finances while also assisting in the organisation’s smooth operation.

• Capital Structure and Factors: One of the essential financial management decisions is the financing pattern or the percentage of cash raised from various sources. The sources of corporate financing may be roughly categorised into two groups based on ownership: ‘owners money’ and ‘borrowed funds.’ The combination of owners and borrowed cash is referred to as capital structure. The balanced proportions of various forms of funds must be determined when deciding on a company’s capital structure. Cash Flow Position, Interest Coverage Ratio (ICR), Debt Service Coverage Ratio (DSCR), Return on Investment (RoI), Cost of Debt, Tax Rate, Cost of Equity, Floatation Costs, Risk Consideration, Flexibility, Control, Regulatory Framework, Stock Market Conditions, and Capital Structure of Other Companies are some of the factors that influence this.
• Fixed and Working Capital: Long-term assets are referred to as fixed capital. Fixed capital management is allocating a company’s money to various initiatives or assets that have long-term ramifications for the company. These choices are referred to as investment or capital budgeting decisions. They have a long-term impact on the business’s growth, profitability, and risk. Nature of Business, Scale of Operations, Technique Selection, Technology Upgrades, Growth Prospects, Diversification, Financing Options, and Level of Collaboration are all factors that influence the need for fixed capital. Aside from fixed assets, every firm has to invest in current assets. This investment helps the company run smoothly on a day-to-day basis. Current assets are generally more liquid than fixed assets, although they contribute less to earnings. Nature of Business, Scale of Operations, Business Cycle, Seasonal Factor, Production Cycle, Credit Allowed, Credit Availed, Operating Efficiency, Availability of Raw Material, Growth Prospects, Level of Competition, and Rate of Inflation are all factors that impact working capital requirements.

Class 12 Business Studies Chapter 9 Notes: Exercises and Answer Solutions

Class 12 Business Studies chapter 9 notes are available on the Extramarks website. Subject experts have prepared these notes as per the CBSE syllabus. Register online with Extramarks to clear all the doubts and get access to all exercises and answer solutions. 

A list of detailed solutions for all the questions is listed below:

• Very Short Answer Type Questions and Solutions- 5 Questions
• Short Answer Type Questions and Solutions- 7 Questions
• Long Answer Type Questions and Solutions- 6 Questions

Stay tuned with Extramarks to get class 12 Business Studies chapter 9 notes and exclusive updates on the upcoming examinations and exam pattern, CBSE syllabus, revision notes, etc.

Class 12 Business Studies Chapter 9 Notes: NCERT Exemplar Class 12 Business Studies

NCERT Exemplar Class 12 Business Studies answers are provided here to assist the students in their final exam preparation. These exemplar questions are a little more complex, and they cover a variety of concepts covered in each chapter of the class 12 Business Studies course. Extramarks provide students with access to these exemplar problems and solutions for class 12 Business Studies chapter by chapter.

Students will completely understand all the concepts covered in each chapter by practising this NCERT Exemplar for Business Studies in class 12. Each question in these resources is related to the topics covered in the CSBE Class 12 syllabus and is created by our specialists to offer the best solutions to students’ experiences. All of these questions reflect the question pattern found in NCERT books to match the topics taught in each class and give the greatest practising materials or worksheets for students.