Page 60 - DMGT405_FINANCIAL%20MANAGEMENT

Financial Management

Notes Retained Earnings: These are the portion of earning available to equity shareholders, which are
ploughed back in the company.
Trade Credit: It refers to the credit extended by the supplier of goods or services to his/her
customer in the normal course of business.

3.10 Review Questions

1. Explain the advantages of equity financing.
2. What are the advantages of debt financing from the point of the company and investors?

3. What do you mean by venture capital financing and what are the methods of this type of
financing?
4. Write short notes on:

(a) Zero interest fully convertible
(b) Deep discount bonds
(c) Inflation bonds
(d) Sales tax deferments and Exemptions.

5. What are the advantages of lease financing?
6. “Is Trade Credit is source of working capital finance”. Discuss.
7. Taking the example of the Indian corporate, analyse the importance of issuing the CPs for
the firm & to the investors.
8. Do you agree that lease is the efficient source of finance for corporates? How?
9. In your opinion, which is the best source of finance available to the firm for raising money
from the public?
10. You are starting your new company & wanted to raise capital from public. Analyse the
sources of finance available to you.

Answers: Self Assessment
1. 5 – 10 2. short-term 3. risk
4. public issue 5. common shares 6. direct
7. debt 8. Bridge finance 9. unsecured
10. conditional 11. Income note 12. financial
13. Operating 14. IDBI 15. backward
3.11 Further Readings

Books Dr Pradeep Kumar Sinha, Financial Management, New Delhi, Excel Books, 2009.
Chandra, P., Financial Management—Theory and Practice, New Delhi, Tata McGraw
Hill Publishing Company Ltd., 2002, p. 3.
I.M. Pandey, Financial Management, 8th Edn., Vikas Publishing House Pvt. Ltd.
Lawrence J. Gitman, Principles of Managerial Finance, 10th Edn., Parson Education.

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