CBSE Sample Papers for Class 12 Business Studies Paper 6

CBSE Sample Papers for Class 12 Business Studies Paper 6 are part of CBSE Sample Papers for Class 12 Business Studies Here we have given CBSE Sample Papers for Class 12 Business Studies Paper 6.

CBSE Sample Papers for Class 12 Business Studies Paper 6

Students who are going to appear for CBSE Class 12 Examinations are advised to practice the CBSE sample papers given here which is designed as per the latest Syllabus and marking scheme as prescribed by the CBSE is given here. Paper 6 of Solved CBSE Sample Papers for Class 12 Business Studies is given below with free PDF download solutions.

Time: 3 Hours
Maximum Marks: 80

General Instructions

(i) Answer to questions carrying 1 mark may be from one word to one sentence.
(ii) Answer to questions carrying 3 marks may have about 50 to 75 words.
(iii) Answer to questions carrying 4 – 5 marks may have about 150 words.
(iv) Answer to questions carrying 6 marks may have about 200 words.
(v) Attempt all the parts of a question together.

Questions

Question 1:
Beni, after completing her MBA, took up a job with a multinational company named ‘Fortio’. The company was paying good salary and perks to its employees. The wages were within the paying capacity of the company that provided the employees a reasonable standard of living. The company also had a good work-culture and the behaviour of superiors was very good towards their subordinates. Beni was very happy in this organisation, but due to long working hours she did not have time to cook her meal. She had to depend upon outside food, which was deteriorating her health.
She observed that this problem was faced by many of her colleagues, not only in her company but also in many other companies. This was because of increase in the number of working women and non-availability of hygienic home-cooked food. She identified this as a great opportunity and decided to give up her job to supply packaged home-cooked food to office goers at a reasonable price. At the end of the day she was also distributing the left-over food in the nearby night-shelters.

State the dimension of business environment being discussed above.

Question 2:
What was the primary objective of demonetisation announced in 2016 by the Prime Minister Sh. Narendra Modi ?

Question 3:
Give any two examples of single use plan.

Question 4:
Laxmi Chemicals Ltd., a soap manufacturing company, wanted to increase its market share from 30% to 55% in the long run. A recent report submitted by the Research & Development Department of the company had predicted a growing trend of herbal and organic products. On the basis of this report the company decided to diversify into new variety of soaps with natural ingredients having benefits and fragrances of Jasmine, Rose, Lavender, Mogra, Lemon Grass, Green Apple, Strawberry etc. The Unique Selling Proposition (USP) was to promote eco¬friendly living in the contemporary life style. The company decided to allocate ₹ 30 crores to achieve the objective.
Identify the type of one of the functions of management mentioned above which will help the company to acquire dominant position in the market.

Question 5:
Reshu’s father has gifted her shares of a large cement company, with which he had been working. The securities were in physical form. She already has a bank account and does not possess any other forms of securities.
She wished to sell the shares and approached a registered broker for the purpose. Mention one mandatory detail which she will have to provide with the broker.

Question 6:
How do rising prices affect the requirement of working capital of an organisation ?

Question 7:
Good Living Ltd. manufactures mosquito repellent tablets. These tablets are packed in strips of 12 tablets each. Each of these strips are packed in a cardboard box, 48 such boxes are then placed in a big corrugated box and delivered to various retailers for sale. State the purpose of packaging the tablets in a corrugated box.

Question 8:
Shreemaya Hotel in Indore was facing a problem of low demand for its rooms due to off season. The Managing Director (MD) of the hotel, Mrs Sakina was very worried. She called upon the Marketing Manager, Mr Kapoor for his advice. He suggested, that the hotel should announce an offer of ‘3 Days and 2 Nights hotel stay packaged with free breakfast and one day religious visit to Omkarehswar and Mahakaleshwar Temples’. The MD liked the suggestion very much. Identify the promotional tool, which can be used by the hotel, through which large number of prospective pilgrimage tourists, all over the country and also abroad, can be reached, infonned and persuaded to use the incentive.

Question 9:
The marketing manager of an organisation has been asked to achieve target sales of 100 generators per day. He delegates the task to 10 sales managers working under him. Two of them could not achieve their respective target. Is the marketing manager responsible ? Briefly explain the relevant principle in support of your answer.

Question 10:
ABC Crackers Ltd., a fire-cracker manufacturing company launched some new products on the eve of Diwali in the market, which attracted many buyers. To meet the increased demand the company employed people from nearby villages where there is a lot of unemployment. Because of the good behaviour of the management with the employees, more and more people wanted to join the company. As the products were in great demand in the market, a competitor imitated the products. The products of the competitor were not accepted by the consumers as it was a status symbol to buy the products of ABC Crackers Ltd. because of their quality. Identify and explain the product-related decision because of which consumers preferred the products of ABC Crackers Ltd.

Question 11:
‘If anything goes wrong with the performance of key activities, the entire organisation suffers. Therefore, the organisation should focus on them/ Explain the statement with a suitable example.

Question 12:
Aakanksha, Nikita and Parishma are the owners of a handicraft unit in the urban area of Dibrugarh in Assam, which is involved in the manufacturing and marketing of Sital Pati, traditional mats and Jappi (the traditional headgear). They decided to shift this manufacturing unit to a rural area with an objective of reducing the cost and providing job opportunities to the locals.
They followed the functional structure in this organisation with a view to increasing managerial and operational efficiency.
They assessed and analysed the type and number of employees required, keeping in mind that they had to encourage the women, and the people with special needs belonging to the rural area.
State the next three steps that they will have to undertake, for obtaining a satisfied workforce for their handicraft unit.

Question 13:
Saqib Ltd. is a large credit worthy company operating in the Kashmir Valley. It is an export oriented unit, dealing in exclusive embroidered shawls. The floods in the Valley have created many problems for the company. Many craftsmen and workers have been dislocated and raw material has been destroyed. The firm is therefore, unable to get an uninterrupted supply of raw material, and the duration of the production cycle has also increased. To add to the problems of the organisation, the suppliers of raw material who were earlier selling on credit are asking the company, for advance payment or cash payment on delivery. The company is facing a liquidity crisis. The CEO of the company feels that taking a bank loan is the only option with the company to meet its short-term shortage of cash.
As a finance manager of the company name and explain the alternative to bank borrowing that the company can use to resolve the crisis.

Question 14:
Kiran Industries is a company manufacturing office furniture. The company chose to diversify its operations to improve its growth potential and increase market share. As the project was important many alternatives were generated for the purpose and were thoroughly discussed amongst the members of the organisation. After evaluating the various alternatives Sukhvinder, the Managing Director of the company decided that they should add ‘Home Interiors and Furnishings’ as a new line of business activity.

1.  Name the framework, which the diversified organisation should adopt, to enable it to cope with the emerging complexity ? Give one reason in support of your answer.
2. State any two limitations of this framework.

Question 15:
Mrs Rajlaxmi is working as the Human Resource Consultant in a firm manufacturing cosmetic, which is facing a problem of high employee turnover. The CEO of the company has invited suggestions from her for retaining the talented employees and reducing the employee turnover. Mrs Rajlaxmi recommends that the good employees be rewarded in a way that it creates a feeling of ownership among the employees and at the same time makes them contribute towards the growth of the organisation.

1.  Identify the incentive and explain its type, which has been suggested by Mrs Rajlaxmi to the CEO of the company.
2. Also explain any two other incentives of the same type.

Question 16:
Different techniques were developed by Taylor to facilitate principles of scientific management. One of the technique suggests that each worker should be supervised by different specialists in different phases of his job.
Identify the technique and explain it.

Question 17:
Supriya’s grandmother who was unwell, called her and gave her a gift packet. Supriya opened the packet and saw many crumpled share certificates inside. Her grandmother told her that they had been left behind by her late grandfather.
As no trading is now done in physical form, Supriya wants to know the process by adopting which she is in a position to deal with these certificates.

1.  Identify and state the process.
2. Also give two reasons to Supriya why dealing with shares in physical form had been stopped.

Question 18:
“Every time I travelled, people asked me to bring them chips, khakra and pickles from all over the country”, says Anoushka. Finally, she and her colleague, Sumeet, decided to make a business out of it. They launched a facebook page, asked people what they wanted, and they came up with a list of about 100 places and tied up with two dozen vendors to begin with. They were servicing people from Jaipur who wanted spices from Kerala, people from Panipat who wanted halwa from Jammu and people from Delhi who ordered for fresh tea leaves from Darjeeling. Through their business they wished to bridge the gap between sellers and buyers. The business is now worth millions.
Explain any two important activities that Anoushka and Sumeet will have to be involved in for making the goods available to the customers at the right place, in the right quantity and at the right time.

Question 19:
On November 8, 2016 the Prime Minister of India Sh. Narendra Modi announced that the Government of India has withdrawn the old ₹ 500 and ₹1,000 currency notes as an official mode of payment. Demonetisation is an example of a key component of the business environment. Name the components and explain it in brief.

Question 20:
Joseph Bros, was a firm manufacturing jute lamp shades. It uses left over jute pieces from various jute factories to manufacture economical lamp shades which are supplied to various hotels in nearby towns. It employs men and women from nearby villages as workers for creating good lamp shade designs.
Joseph Bros, is not able to meet its targets. Namish, the supervisor of the company, was told to analyse the reasons for the poor performance. Namish found following problems and suggested certain solutions in the working of the business. The number of workers employed was less than what was required for the work. As a result, the existing workers were overburdened. The firm decided to search for new workers and it asked the present employees to introduce candidates or recommend their friends and relatives to the firm. This enabled the firm in “putting people to jobs” and assured attainment of objectives according to plans.

1. Identify the functions of management being performed by the firm in the above situation.
2. Name the concept and its source used by the firm to attract more workers for the firm.
3. State any two merits of the source identified in

Question 21:
Suhasini a home science graduate from a reputed college has recently done a cookery course. She wished to start her own venture with a goal to provide ‘health food’ at reasonable price. She discussed her idea with her teacher (mentor) who encouraged her. After analysing various options for starting her business venture, they shortlisted the option to sell readymade and ‘ready to make’ vegetable shakes and sattu milk shakes. Then, they both weighed the pros and cons of both the shortlisted options.

1.  Name the function of management being discussed above and give any one of its characteristics.
2. Also briefly discuss any three limitations of the function discussed in the case.

Question 22:
Neeraj, a sales representative of ‘Omida Ltd.’ has changed seven jobs in the last one year. He is a hard working person but is not able to finalise deals with the customers due to his inadequate vocabulary and omission of needed words. Sometimes he uses wrong words because of which intended meaning is not conveyed. All this created a mis-understanding between him and his clients.

1.  Identify the communication barrier discussed above.
2. State the category of this communication barrier.
3. Explain any other communication barrier of the same category.

Question 23:
Nutan Tiffin Box Service was started in Mumbai by Mumbai Dabbawalas. The Dabbawalas who are the soul of entire Mumbai aim to provide prompt and efficient services by providing tasty homemade tiffin to all office goers at right time and place. The service is uninterrupted even on the days of bad weather, political unrest and social disturbances. Recently they have started online booking system through their website ‘mydabbawala.com’. Owing to their tremendous popularity amongst the happy and satisfied customers and members, the dabbawalas were invited as guest lecturers by top business schools. The Dabbawalas operate in a group of 25 – 30 people along with a group leader. Each group teams up with other groups in order to deliver the tiffin on time. They are not transferred on frequent basis as they have to remember the addresses of their customers. They follow certain rules while doing trade – No alcohol during working hours; No leave without permission; Wearing of white cap & carrying ID cards during business hours.
Further, employees are encouraged to develop and carryout their plans for improvements in the activities of the organisation.
Recently on the suggestion of a few self-motivated fellow men, the dabbawalas thought out and executed a plan of providing food left in tiffins by customers to slum children. They have instructed their customers to place red sticker if food is left in the tiffin, to be fed to poor children later.
State the principles of management given by Fayol and one characteristic of management mentioned in the above case.

Question 24:
Shalini, after acquiring a degree in Hotel Management and Business Administration took over her family food processing company of manufacturing pickles, jams and squashes. The business was established by her great grandmother and was doing reasonably well. However the fixed operating costs of the business were high and the cash flow position was weak. She wanted to undertake modernisation of the existing business to introduce the latest manufacturing processes and diversify into the market of chocolates and candies. She was very enthusiastic and approached a finance consultant, who told her that approximately ₹50 lakh would be required for undertaking the modernisation and expansion programme. He also informed her that the stock market was going through a bullish phase.

1.  Keeping the above considerations in mind, name the source of finance Shalini should not choose for financing the modernisation and expansion of her food processing business. Give one reason in support of your answer.
2.  Explain any two other factors, apart from those stated in the above situation, which
   Shalini should keep in mind while taking this decision.

Question 25:
Aman a degreeholder in Entrepreneurship came to know about Piplantri Village located in Rajasthan, where in 2006 an initiative was started, in which 111 trees are planted every time a girl child is born.
To keep termites away from the trees the villagers have planted 2.5 million Aloe Vera plants around the trees. This has turned the village into an oasis, as the planting of trees led to higher water levels.
Aman decided to visit the village to start a business unit, for the processing and marketing of Aloe Vera into juices, gels and other products.
However, on visiting the village Aman found that the villagers were suffering exploitation at the hands of local merchants who were engaged in unscrupulous, exploitative trade practices like hoarding and black marketing of food products and also selling unsafe, adulterated products ‘ to the villagers.
After looking at their plight instead of a business organisation he decided to set up an organisation for the protection and promotion of the consumer interest of the villagers.
State the functions that the organisation established by Aman will be performing.

Answers

Answer 1:
Social dimension.

Answer 2:
To curb black money.

Answer 3:

1.  Programme,
2.  Budget,
3. Method.

Answer 4:
The given para mentions the strategy as a type of plan which will help the company to acquire dominant position in the market. Hence, management function is ‘planning’.

Answer 5:
Reshu will have to provide with the broker her Permanent Account Number (PAN).

Answer 6:
Rising prices will lead to higher amount of working capital of an organisation because the organisation will require more amount to maintain same volume of production and sales activities.

Answer 7:
The purpose of packaging the tablets in a corrugated box is to facilitate storage, identification and transportation of tablets.

Answer 8:
Advertising can be used by the hotel to reach, inform and persuade the tourists all over the country.

Answer 9:
Yes, the marketing manager is responsible.
It is due to the principle of absolute responsibility, an important principle of delegation. According to principle of absolute responsibility, authority can be delegated but responsibility cannot be delegated by a manager. The manager continues to remain responsible or accountable to his own superior for the tasks which he may have assigned to his subordinates. Hence, manager cannot escape from responsibility for any default on the part of his subordinates.

Answer 10:
The product-related decision because of which consumers preferred the products of ABC Crackers Ltd. is Branding.
Branding means giving a name, sign symbol, design or a combination of them to product by which it should become known by the consumers. The main purpose of branding is to distinguish a 1 manufacture’s product from the rival products. Thus, branding helps in creating product differentiation. Branding helps the customers in identifying the products. This results in repeat purchase of the products. Branding ensures a particular level of quality of the product. Use of branded goods adds to status symbol of customers.

Answer 11:
The given statement highlights the principle of ‘critical point control’ while analysing the deviations.
The principle of ‘critical point control’ emphasises that the management of an organisation K should have its focus on deviations in the key areas i.e., deviations critical to performance of key activities. For example, if postal expenses increase by 10 per cent, the deviation is not important to require managerial attention. But, if cost of direct materials rise by even 1 per cent, it should receive immediate attention. Therefore, it is rightly said, “if you try to control everything you may end up by controlling nothing”. More a manager concentrates his energies on important deviations, the more effective will be the process of controlling.

Answer 12:
After the process of manpower planning, Aakanksha, Nikita and Parishma should undertake following steps for obtaining workforce :
(i) Recruitment – Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organisation. Following are two sources of recruitment:

• Internal sources.
• External sources.

(ii) Selection – Selection of personnel is a series of steps by which candidates are screened to find out which of them is best suited for a particular job. It is the process of dividing the applicants into two categories, namely,

•  those who are to be employed, and
•  those who are to be rejected.

Selection is a very comprehensive and complex process which involves a number of steps such as employment tests, interview, medical examination, etc.
(iii) Orientation and placement – Placement is the process of fitting the selected person to the right job. Orientation is the task of introducing and familiarising the new employee to the rules and policies of the organisation.

Answer 13:
As a finance manager of company, I shall opt for one of the money market instruments, preferably commercial paper. Commercial paper is a short-term unsecured promissory note, negotiable and transferable by endorsement and delivery with a fixed maturity period. Following are the features of a commercial paper :

1.  Commercial paper has a fixed maturity period ranging from 15 days to one year.
2. It is issued by large and creditworthy companies.
3.  It is negotiable and transferable by endorsement and delivery.
4.  It is sold at a discount and redeemed at par.
5. Its rate of interest is lower than market rates.

Answer 14:
(a) Divisional structure is the framework which the diversified organisation should adopt.
One of the reason in support of divisional structure is that divisional structure facilitates growth and expansion as new divisions can be added without disrupting the existing operations by merely adding another divisional head and staff for the new product line.
(b) Following are the limitations of the divisional structure :

1. Expensive – Each department is required to maintain all resources and types of services. This gives rise to duplication of efforts which results in high operating costs.
2. Narrow focus – Managers of each department focus on their own product without thinking of the rest of the organisation.
3.  Clash of interests – Divisional manager may have different approach from organisation’s approach. There may be clash of interests.

Answer 15:
(a) The given para highlights the financial incentive to be adopted by the firm. Among the financial incentives, the above mentioned para mentions co-partnership as financial incentive.

Co-partnership – Under the scheme of co-partnership, a worker gets his usual wages, a share in the profit of the company and a share in the management of the company as well. Co-partnership implies both profit-sharing and control sharing.
(b) Following are some of the other financial incentives :

1.  Bonus – Bonus is a reward that is offered on a one-time basis for high performance. A bonus may be in cash or in some other form like trips for top sales people. Bonus is different from merit increase which is perpetuated year after year.
2. Profit-sharing – Under this scheme, employees are given a legitimate share in the surplus earned by the firm. It is a scheme of providing a sort of group incentive to the workers for higher productivity and greater profitability. Employers often use this device to extort the loyalty of workers and reduce the influence of trade unions.

Answer 16:
The technique of scientific management discussed in above case is functional foremanship. Under the scientific management, there should be specialisation in the administrative and organisa- tidnal set-up of the plan. For this, Taylor suggested functional foremanship. In this way, a worker is supervised by several specialist foremen. This is shown in following figure :

Following are the features of functional foremanship :

1.  Functional foremanship is a technique which aims to improve the quality of supervision at shop floor.
2. Taylor identified a list of qualities of good foreman or a supervisor. Since all the qualities could not be found in a single person, Taylor proposed eight specialists.
3.  In this technique, planning is separated from execution.
4. It is an extension of the principle of division of work and specialisation.
5.  Taylor suggested four foremen for planning and four foremen for execution. The four foremen for planning were route clerk, instruction card clerk, time and cost clerk and disciplinarian clerk and four foremen for execution were gang boss, speed boss, maintenance foreman and inspector.

Answer 17:
(a) Supriya should adopt the process of dematerialisation.
Dematerialisation of shares means a process of converting the physical form of shares into electronic form. Under dematerialisation, an investor holds the various securities as an electronic balance in an account. Dematerialisation requires an investor to open an account with a depository participant.
(b) Following are the reasons to Supriya why dealing with shares in physical form had been stopped:

• Transfer delays – Shares in physical form requires a good number of days for their transfer from one person to another. Transfer of dematerialised shares can be effected in much simpler and faster way.
• Theft – Shares in physical form are not safe and are subject to evils of the fire, theft, pilferage, mutilation etc.

Answer 18:
For making the goods available to the customers at the right place, in the right quantity and at the right time, following activities relating to physical distribution are required :
(i) Order processing – Order placement is the first step. Order processing cycle involves the following:

• Receipt of order from the customers.
• Entry of order in company’s records.
• Procuring goods from inventory.
• Despatch of goods.

(ii) Transportation – Transportation means physical movement of goods from one place to another. Roadways, railways, shipping, etc., are used in transportation. Transportation is an important activity because most of the markets are geographically separated.
(iii) Warehousing – Warehousing refers to an activity of holding the goods in perfect state to create time utility. The purpose of warehousing is to provide safety and protection of goods. Warehousing is needed when there is difference between the time of consumption and time of production.

Answer 19:
Demonetisation is a component of economic environment of business.
Economic environment refers to broad characteristics of the economic system in which a business enterprise operates. Following are the components of economic environment:

1.  Relative role of private and public sectors.
2. Growth rate of GNP and per capita income at current and constant prices.
3.  Rates of savings and investments.
4. Volume of imports and exports of different items.
5. Balance of payment and changes in foreign exchange reserves.
6.  Agricultural and industrial production trends.
7. Money supply in the economy.

A business enterprise is an economic institution and therefore, economic environment exercises significant influence on business. For example, reduction in rate of interest reduces the cost of capital and thus encourages more investment in business operations. Similarly taxation policy, monetary policy and industrial policy of the government influences the working of the organisation. A rise in the disposable income of people due to increase in national income creates increasing demand for products.

Answer 20:
(a) In the given situation, following functions of management are being performed by the firm:

•  Staffing,
• Controlling.

(b) Recruitment is the concept used by the firm to attract more workers for the firm.
Joseph Bros, is relying on recommendations of employees of external sources of recruitment.

(c) Following are the merits of external sources of recruitment (Any two):

• Wider choice – When an organisation adopts external sources of recruitment, it gets an opportunity to make selection among the large number of candidates. Thus, management has a wider choice.
• Fresh talent – When vacancies are advertised widely, a large number of applicants from outside the organisation apply. As a result, organisation gets fresh talents and new blood available outside the organisation.
• Competitive spirit – When an organisation uses external sources of recruitment, existing employees will have to compete with the outsiders. This promotes competitive spirit in the organisation.

Answer 21:
(a) Planning is the function of management being discussed in the given para.
One of the characteristics of planning is that planning is a mental exercise. Planning implies ability to think out ways to benefit from the opportunities which have yet to arise. Planning is a mental activity. Planning requires application of mind involving foresightedness, intelligent imagination and judgment. Managers have to consider various courses of action, evaluate the merits and demerits of every course of action and then finally decide which course of action may suit them best. The quality of planning will vary according to quality of mind of the manager.

(b) Following are the limitations of planning :

1. Planning is a time-consuming process – Planning requires collection of information, its analysis and interpretation. These activities take considerable time. Planning is not practicable when quick decisions are to be made. Planning requires time for thinking, collecting data, forecasting, evaluating alternatives and attending other aspects of planning.
2.  Planning results in rigidity – Planning implies prior determination of policies and procedures while business environment is dynamic. This prevents managers from taking initiatives and from doing innovative thinking. Blind conformity with predetermined rules and procedures promotes red tapism and delay in the performance of work. A manager is caught between procedures and formalities where there is a need for quick action.
3. Planning is an expensive process – Planning depends on effective system of feedback, transmitting necessary data, collection and analysis of data and evaluation of various courses of action. It results in heavy expenditure. Cost of planning may go on increasing if planning becomes more elaborate and formalised. Apart from direct cost involved, such as paper work etc. may also be a costly affair.

Answer 22:
(a) Communication barrier discussed above is badly expressed message.
(b) The category of badly expressed message is semantic barrier. Semantic barriers of communication are the problems or obstructions in the process of encoding and decoding of message into words or impressions.
(c) Following are other important semantic barriers :

1. Words with different meanings.
2. Faulty translations.
3. Unclarified assumptions.
4. Technical jargon.
5. Body language and gesture decoding.

Words with different meanings – Sometimes, sender of the message uses a word having several meanings. The receiver of message may perceive the meaning wrongly leading to communication problems. For example, value has different meanings.

Answer 23:
(a) (i) Principle of Discipline – Discipline in the context of management means obedi¬ence, proper conduct in relation to others and complying with the rules and regulations of the organisation. Smooth running of business requires discipline. Discipline is required not only on the part of workers but also on the part of management. It is facilitated if there are good supervisors at all levels, rules are clear, and penalties are imposed with fairness.
The positive effect of principle of discipline is to ensure smooth running of business.

(ii) Initiative – Initiative is the power of thinking out a plan and ensuring its successful implementation. It stimulates human endeavour. In other words, initiative means eagerness to initiate action without being asked to do so. Employees at all levels should be allowed to take initiative in work related matters. In an organisation, initiative on the part of its employees can become a great source of strength for it. One of the characteristics of management mentioned in the given para is that management is a group activity.

(iii) Management is a group activity – Management comes into picture where groups of persons are involved in working towards a common objective. Where a single individual works for his individual goals, management has no role to play.

Answer 24:
(a) Shalini should not choose ‘debt’ as a source of finance for financing the modernisation and expansion of her business.
The main reason for our suggestion is that the cash flow position of the firm is weak and as a result, the firm may not be able to honour fixed cash payment obligations.
(b) Following are the other factors which Shalini should keep in mind while taking the decision relating to source of finance :

1. Conditions of capital market – The time of issue and the composition of the buyers should be kept in mind. If capital market is depressed i.e., investors are not willing to subscribe to shares, a company should rely on debt as a source of finance.
2. Desire to control – Desire of the promoters to have control over the company is an important factor. If the promoters want to retain control, they will issue more debentures and preference shares and less equity shares.
3.  Regulatory framework – The management of a company should consider regulatory framework provided by Companies Act, SEBI Guidelines, etc. Raising funds from banks and financial institutions require fulfilment of some norms.

Answer 25:
Aman has set up a non-government organisation (NGO) for the protection and promotion of the consumer interest. Such organisation will perform following functions :

1. Awareness – Consumer organisations and NGOs educate the general public about consumer rights by organising training programmes, seminars and workshops.
2. Publications – Consumer organisations publish periodicals, brochures, journals etc. to impart knowledge about consumer problems, legal reporting, reliefs available etc.
3. Testing – Consumer organisations and NGOs carryout comparative testing of consumer products in laboratories and publish the test results for the benefit of consumers.
4. Legal assistance – Consumer organisations and NGOs provide legal assistance to consumers for seeking legal remedy.
5. Filing of suits – Consumer organisations file complaints in consumer courts on behalf of consumers and on their own for the interest of general public.
6. Protest – Consumer organisations and NGOs organise protests against the various mal-practices such as price rigging, adulteration, sale of hazardous products, hoarding and black marketing.

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