Question:
‘Increase in profit earned by equity shareholders due to the presence of fixed financial charges like interest' is referred to as:
‘Increase in profit earned by equity shareholders due to the presence of fixed financial charges like interest' is referred to as:
Show Hint
Trading on equity occurs when a company uses debt to amplify the returns on equity. This practice increases profit for shareholders but also raises financial risk.
Updated On: Feb 19, 2025
- Capital structure
- Financing decision
- Return on Investment
- Trading on equity
Hide Solution
Verified By Collegedunia
The Correct Option is D
Solution and Explanation
The correct answer is Trading on equity. Trading on equity occurs when a company uses fixed financial charges, such as interest on debt, to increase the return for its equity shareholders. The presence of debt can amplify the profits for equity shareholders due to the leverage effect.
Was this answer helpful?
0
0
Top Questions on Marketing Management
- Ankur Sachdeva did his MBA from ITB University. He decided to apply his knowledge of scientific management in the fast food restaurant chain 'Coffee Bean' set up by him. This restaurant was providing burgers, fries, shakes etc, as a part of its menu. Nowadays people are quality conscious, so he was using standardised raw materials, processes, methods, working conditions, machinery etc. The objective was to establish standards of excellence. By doing this he was not only able to reduce the cost but was also able to provide new varieties of burgers, fries and shakes leading to increased turnover. Ankur Sachdeva also believed that there was only one best method to maximise efficiency. As a result he developed best way of grilling burgers, cooking fries and preparing shakes. His main objective was to maximise the satisfaction of customers, which he was able to achieve. Not only to learn the best way of doing a job, but to perform their tasks efficiently, 'Coffee Bean' regularly invests in training and development programmes to equip employees with the necessary skill and knowledge. 'Coffee Bean' believed that efficient employees will produce more and earn more. This will ensure their greatest efficiency and prosperity for both company and workers. The above case highlights the use of Scientific principles and techniques by 'Coffee Bean'. Explain any one such principle and two techniques.
- CBSE CLASS XII - 2024
- Business Studies
- Marketing Management
- Explain the following limitations of the planning function of management:
(b) Planning may not work in a dynamic environment.
(ii) Planning leads to rigidity.
(iii) Planning is time-consuming.- CBSE CLASS XII - 2024
- Business Studies
- Marketing Management
- The picture given below is the package of a perfume bottle: Identify the level of packaging of the box shown above:
- CBSE CLASS XII - 2024
- Business Studies
- Marketing Management
- Statement-I: That part of a brand which can be spoken is called a brand name. Statement-II: That part of the brand which is given legal protection is called Trademark. Choose the correct option from the following:
- CBSE CLASS XII - 2024
- Business Studies
- Marketing Management
- ‘Marbury Biscuits’ launched its new range of oat cookies in three varieties. They decided to distribute free samples of their biscuits in schools as a part of their promotional campaign. Identify the tool of promotion used by ’Marbury Biscuits’:
- CBSE CLASS XII - 2024
- Business Studies
- Marketing Management
View More Questions
Questions Asked in CBSE CLASS XII exam
- Which fruit has the maximum vitamin A content?
- CBSE CLASS XII - 2024
- Nutrition
- Write the reactions of glucose with
(a) HI
(b)\((CH_3CO_2)O\)- CBSE CLASS XII - 2024
- Biomolecules
- Preeti started her own cooking channel on 'Youtube Mood Art'. As her subscribers increased, she was not in a position to manage everything on her own. She hired Rahul and Riya to help her with filming editing, lighting and content research. She granted authority to them to operate within prescribed limits. She was thus, able to use her time on high priority activities like developing new recipes and content development etc. As a result, Rahul and Riya were given opportunities to develop and exercise initiative. Preeti was now able to focus on objectives and meet the target of achieving a subscriber base of one million in six months.
(a) Identify the concept of management used by Preeti.
(b) Explain any five points of importance of the concept identified in .- CBSE CLASS XII - 2024
- Organising
- Explain the following types of plans:
(b) Strategy
(ii) Method
(iii) Budget- CBSE CLASS XII - 2024
- Principles of Management
- State any two reliefs that can be granted to Nishi, if the consumer court is satisfied with the genuineness of the complaint.
- CBSE CLASS XII - 2024
- Financial Planning
View More Questions