(Q.NO. 32 TO 34 OF 6 MARKS EACH)32. 'Monisha Consumer Goods' is a lead

1.	(Q.NO. 32 TO 34 OF 6 MARKS EACH)32. 'Monisha Consumer Goods' is a leading consumer goods chain with anetwork of 46 stores primarily across Mumbai, Delhi and Pune. It wasstarted by Monisha Gupta in 1987. It has a large market share in Mumbai.Delhi and Pune, Looking for an opportunity to expand, it has decided toopen a new branch in Kerala. It has to decide on what new resources itwill invest in so that it is able to earn the highest possible return for itsinvestors. Once the company believes that it will be able to generate higherrevenue and profits, it also has to decide on how this project will get funded.The finance manager Atul was told to have an optimal capital structure bystriking a balance between various sources of getting the project fundedso as to increases shareholders' wealth. Atul, after assessing the cashflow position of the company, evaluated the cost of different sources offinance and compared the risk associated with each source as well as thecost of raising funds.(a) State the two financial decisions discussed in the above situation.(b) Explain any two financial decisions discussed in the above situation.
Answer» Answer:financial decisions taken: 1. what new RESOURCE to invest to EARN high possible returns i.e. Profit 2. How the project will be funded Explanation: 1.what to invest on? when ever you decide to inves in any new venture or plan for growth, we must take into confederation all the recourses required i.e. WORKFORCE required, capital required, machine required, knowledge required and how to utilise these resources in an effective manner. 2.how will it be funded? the answer to this question requires specialised knowledge. It is based on the decision taken about the SOURCE of attaining the required resources I.e. banks, financial institutions, raise share, debentures, loan from a friend, public DEPOSIT, foreign investment etc

(Q.NO. 32 TO 34 OF 6 MARKS EACH)32. 'Monisha Consumer Goods' is a leading consumer goods chain with anetwork of 46 stores primarily across Mumbai, Delhi and Pune. It wasstarted by Monisha Gupta in 1987. It has a large market share in Mumbai.Delhi and Pune, Looking for an opportunity to expand, it has decided toopen a new branch in Kerala. It has to decide on what new resources itwill invest in so that it is able to earn the highest possible return for itsinvestors. Once the company believes that it will be able to generate higherrevenue and profits, it also has to decide on how this project will get funded.The finance manager Atul was told to have an optimal capital structure bystriking a balance between various sources of getting the project fundedso as to increases shareholders' wealth. Atul, after assessing the cashflow position of the company, evaluated the cost of different sources offinance and compared the risk associated with each source as well as thecost of raising funds.(a) State the two financial decisions discussed in the above situation.(b) Explain any two financial decisions discussed in the above situation.

Answer»

Answer:financial decisions taken:

1. what new RESOURCE to invest to EARN high possible returns i.e. Profit

2. How the project will be funded

Explanation:

1.what to invest on?

when ever you decide to inves in any new venture or plan for growth, we must take into confederation all the recourses required i.e. WORKFORCE required, capital required, machine required, knowledge required and how to utilise these resources in an effective manner.

2.how will it be funded?

the answer to this question requires specialised knowledge. It is based on the decision taken about the SOURCE of attaining the required resources I.e. banks, financial institutions, raise share, debentures, loan from a friend, public DEPOSIT, foreign investment etc

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