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Business Studies · 2023 · 3 marks
Financial MarketsSecurities and Exchange Board of India (SEBI) - Objectives and Functions3 marksshort answer
CBSE 2023 · Region 5 · Set 1 · Q24
(a) State any three Development functions of Securities and Exchange Board of India.
(a)
State any three Development functions of Securities and
Exchange Board of India.
OR
(b)
State any three factors that affect the working capital
requirements of a company.
Marking-scheme solution
Development functions of Securities and Exchange Board of
India:
(a)
Training of intermediaries of the securities market.
(b)
Conducting research and publishing information useful to all
market participants.
(c)
Undertaking measures to develop the capital markets by adopting
a flexible approach.
OR
Factors affecting working capital requirements of a company:
(a)
Nature of business as trading organisation requires smaller
amounts of working capital than manufacturing organisations as
there is no processing. Service industries require less working capital
as they do not have to maintain inventory.
(b)
Scale of operations as firms operating on a higher scale require
more working capital as their quantum of inventory and debtors is
generally high.
(c)
Business cycle as in case of boom, larger working capital is
required as the sales and production are more.
(d)
Seasonal factors as peak season requires higher working capital
than lean season due to higher level of activity.
(e)
Production Cycle as working capital requirement is higher in
firms with longer processing cycle.
(f)
Credit allowed to customers results in higher amount of debtors,
increasing the working capital requirement.
(g)
Credit availed from suppliers reduces the working capital
requirement.
(h)
Operating efficiency as firms managing their raw materials
efficiently require lesser working capital.
(i)
Free and continuous availability of raw materials enables the firms
to keep lesser stock and hence work with smaller working capital.
(j) Higher Growth prospects will require larger amounts of working
capital so that the firm is able to meet higher production and sales
targets
(k) Level of competition as higher competition requires larger stocks
to meet urgent orders from customers and thus higher working
capital.
(l) Inflation increases the working capital requirements as larger
amount of money is required to maintain a constant volume of
production and sales.
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CBSE Class 12 Business Studies past-paper question from the 2023 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.