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Business Studies · 2024 · 4 marks
CBSE 2024 · Region 2 · Set 2 · Q27
(a) Explain the following factors affecting the requirements of fixed capital: (i) Technology upgradation (ii) Choice of technique
(a)
Explain the following factors affecting the requirements of
fixed capital:
(i)
Technology upgradation
(ii)
Choice of technique
OR
(b)
Explain the following factors affecting dividend decision:
(i)
Stability of earnings
(ii)
Taxation policy
Marking-scheme solution
(i)
Technology upgradation
In certain industries, assets become obsolete sooner and
their replacements become due faster.
Higher investment in fixed assets may, therefore, be
required in such cases.
(ii)
Choice of technique
A capital-intensive organisation requires higher investment
in plant and machinery as it relies less on manual labour.
The requirement of fixed capital for such organisations
would be higher.
Labour intensive organisations on the other hand require
less investment in fixed assets. Hence, their fixed capital
requirement is lower.
(i)
Stability of earnings
Other things remaining the same, a company having stable
earning is in a better position to declare higher dividends.
As against this, a company having unstable earnings is
likely to pay smaller dividend.
(ii)
Taxation policy
If tax on dividend is higher, it is better to pay less by way
of dividends.
As compared to this, higher dividends may be declared if
tax rates are relatively lower.
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CBSE Class 12 Business Studies past-paper question from the 2024 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.