FINANCIAL MANAGEMENT 12 MARKS

CONCEPT MAPPING:
Key Concepts in nutshell:

Menin! o" #usiness Finnce: Money required for carrying out business activities is called
business finance.
Finncil Mn!e$ent: It is concerned with optimal procurement as well as usage of
finance.

Role o" Finncil Mn!e$ent: It cannot be over-emphasized, since it has a direct bearing
on the financial health of a business. The financial statements such as rofit and !oss "#$ and
%#& reflect a firm's financial position and its financial health.
i( The size as well as the composition of fi)ed assets of the business
ii( The quantum of current assets as well as its brea*-up into cash, inventories and
receivables.
iii( The amount of long-term and short-term financing to be used.
iv( %rea*- up of long-term financing into debt, equity etc.
v( "ll items in the profit and loss account e.g., interest, e)penses, depreciation etc.


O%&ecti'es o" Finncil Mn!e$ent: Ma)imisation of owners' wealth is sole ob+ective of
financial management. It means ma)imization of the mar*et value of equity shares. Mar*et
price of equity share increases if the benefits from a decision e)ceed the cost involved.

FINANCIAL (ECISIONS



In'est$ent (ecision: It relates to how the firm's funds are invested in different assets .
Investment decision can be long-term or short-term. " long-term investment decision is also
called a $apital %udgeting decision.

Fcto)s ""ectin! Cpitl #u*!etin! (ecision+In'est$ent (ecision:
1, Csh "lo-s o" the p)o&ect: If anticipated cash flows are more than the cost involved then
such pro+ects are considered.
2, The )te o" )etu)n: The investment proposal which ensures highest rate of return is
finally selected.
., The in'est$ent c)ite)i in'ol'e*: Through capital budgeting techniques, investment
proposals are selected.

Finncin! (ecision: / It refers to the quantum of finance to be raised from various sources of
long-term of finance. It involves identification of various available sources. The main sources
of funds for a firm are shareholders funds and borrowed funds. &hareholders funds refer to
equity capital and retained earnings. %orrowed funds refer to finance raised as debentures or
other forms of debt.

Fcto)s A""ectin! Finncin! (ecision:/
0 Cost: The cost of raising funds through different sources is different. " prudent financial
manager would normally opt for a source which is the cheapest.
1%0 Ris2: The ris* associated with different sources is different.
1c0 Flottion Costs: ,igher the floatation cost, less attractive the source.
1*0 Csh Flo- Position o" the #usiness: " stronger cash flow position may ma*e debt
financing more viable than funding through equity.
1e0 Le'el o" Fi3e* Ope)tin! Costs: If a business has high level of fi)ed operating costs -e.g.,
building rent, Insurance premium, &alaries etc.(, It must opt for lower fi)ed financing costs.
,ence, lower debt financing is better. &imilarly, if fi)ed operating cost is less, more
"0 Cont)ol Consi*e)tions: Issues of more equity may lead to dilution of management's
control over the business. .ebt financing has no such implication. $ompanies afraid of a
ta*eover bid may consequently prefer debt to equity.
!0 Stte o" Cpitl M)2ets: ,ealth of the capital mar*et may also affect the choice of source
of fund. .uring the period when stoc* mar*et is rising, more people are ready to invest in
equity. ,owever, depressed capital mar*et may ma*e issue of equity shares difficult for any
company.
(I4I(EN( (ECISION:/The decision involved here is how much of the profit earned by
company -after paying ta)( is to be distributed to the shareholders and how much of it should
be retained in the business for meeting the investment requirements.

FACTORS AFFECTING (I4I(EN( (ECISION:/
0 E)nin!s: .ividends are paid out of current and past earning. Therefore, earnings is a
ma+or determinant of the decision about dividend.
1%0 St%ility o" E)nin!s: /ther things remaining the same, a company having stable earning
is in a position to declare higher dividends. "s against this, a company having unstable
earnings is li*ely to pay smaller dividend.
c0 St%ility o" (i'i*en*s: It has been found that the companies generally follow a policy of
stabilising dividend per share.
1*0 G)o-th Oppo)tunities: $ompanies having good growth opportunities retain more
money out of their earnings so as to finance the required investment.
1e0 Csh Flo- Position: .ividends involve an outflow of cash. " company may be profitable
but short on cash. "vailability of enough cash in the company is necessary for declaration of
dividend by it.
1"0 Sh)ehol*e) P)e"e)ence: 0hile declaring dividends, managements usually *eep in mind
the preferences of the shareholders in this regard.
1!0 T3tion Policy: The choice between payment of dividends and retaining the earnings is,
to some e)tent, affected by difference in the ta) treatment of dividends and capital gains.
1h0 Stoc2 M)2et Rection: Investors, in general, view an increase in dividend as a good
news and stoc* prices react positively to it. &imilarly, a decrease in dividend may have a
negative impact on the share prices in the stoc* mar*et.
1i0 Access to Cpitl M)2et: !arge and reputed companies generally have easy access to the
capital mar*et and therefore may depend less on retained earnings to finance their growth.
These companies tend to pay higher dividends than the smaller companies which have
relatively low access to the mar*et.
1&0 Le!l Const)ints: $ertain provisions of the $ompany's "ct place restrictions on payouts
as dividend. &uch provisions must be adhered to while declaring the dividends.
120 Cont)ctul Const)ints: 0hile granting loans to a company, sometimes the lender may
impose certain restrictions on the payment of dividends in future.

FINANCIAL PLANNING
1inancial lanning is essentially preparation of financial blueprint of an organisations's
future operations. The ob+ective of financial planning is to ensure that enough funds are
available at right time.
O#5ECTI4ES

10 To ensu)e 'il%ility o" "un*s-hene'e) these )e )e6ui)e*: This include a proper
estimation of the funds required for different purposes such as for the purchase of long-term
assets or to meet day- to- day e)penses of business etc.
1%0 To see tht the "i)$ *oes not )ise )esou)ces unnecess)ily: 2)cess funding is almost
as bad as inadequate funding.
IMPORTANCE OFFINANCIAL PLANNING
-i( It tries to forecast what may happen in future under different business situations. %y doing
so, it helps the firms to face the eventual situation in a better way. In other words, it ma*es the
firm better prepared to face the future.
-ii( It helps in avoiding business shoc*s and surprises and helps the company in preparing for
the future.
-iii( If helps in co-ordinating various business functions e.g., sales and production functions,
by providing clear policies and procedures.
-iv( .etailed plans of action prepared under financial planning reduce waste, duplication of
efforts, and gaps in planning.
-v( It tries to lin* the present with the future.
-vi( It provides a lin* between investment and financing decisions on a continuous basis.
-vii( %y spelling out detailed ob+ectives for various business segments, it ma*es the evaluation
of actual performance easier.
CAPITAL STR7CT7RE: $apital structure refers to the mi) between owners and borrowed
funds.
FACTORS AFFECTING T8E C8OICE OF CAPITAL STR7CT7RE
1, Csh Flo- Position: &ize of pro+ected cash flows must be considered before issuing debt.
2, Inte)est Co'e)!e Rtio 1ICR0: The interest coverage ratio refers to the number of times
earnings before interest and ta)es of a company covers the interest obligation.
., (e%t Se)'ice Co'e)!e Rtio1(SCR0: .ebt &ervice $overage 3atio ta*es care of the
deficiencies referred to in the Interest $overage 3atio -I$3(.
9, Retu)n on In'est$ent 1RoI0: If the 3oI of the company is higher, it can choose to use
trading on equity to increase its 2&, i.e., its ability to use debt is greater.
:, Cost o" *e%t: " firm's ability to borrow at a lower rate increases its capacity to employ
higher debt. Thus, more debt can be used if debt can be raised at a lower rate.
;, T3 Rte: &ince interest is a deductible e)pense, cost of debt is affected by the ta) rate.

<, Cost o" E6uity: &toc* owners e)pect a rate of return from the equity which is
commensurate with the ris* they are assuming. 0hen a company increases debt, the financial
ris* faced by the equity holders, increases.
=, Flottion Costs: rocess of raising resources also involves some cost. ublic issue of
shares and debentures requires considerable e)penditure. 4etting a loan from a financial
institution may not cost so much.
>, Ris2 Consi*e)tion: "s discussed earlier, use of debt increases the financial ris* of a
business.
1?, Fle3i%ility: If a firm uses its debt potential to the full, it loses fle)ibility to issue further
debt.
11, Cont)ol: .ebt normally does not cause a dilution of control.
12, Re!ulto)y F)$e-o)2: 2very company operates within a regulatory framewor*
provided by the law e.g., public issue of shares and debentures has to be made under &2%I
guidelines.
1., Stoc2 $)2et con*itions: If the stoc* mar*ets are bullish, equity shares are more easily
sold even at a higher price. ,owever, during a bearish phase, a company may find raising of
equity capital more difficult and it may opt for debt.
19, Cpitl St)uctu)e o" othe) co$pnies: " useful guideline in the capital structure
planning is the debt-equity rations of other companies in the same industry. There are
usually some industry norms which may help.
MANAGEMENT OF FI@E( CAPITAL
1i)ed capital refers to investment in long-term assets. Management of fi)ed capital
involves around allocation of firm's capital to different pro+ects or assets with long-term
implications for the business. These decisions are called investment decisions or capital
budgeting decisions and affect the growth, profitability and ris* of the business in the long
run. These long-term assets last for more than one year.


IMPORTANCE OF CAPITAL #7(GETING (ECISIONS
1i0 Lon!/te)$ !)o-th n* e""ects: These decisions have bearing on the long-term growth.
The funds invested in long-term assets are li*ely to yield returns in the future.
1ii0 L)!e $ount o" "un*s in'ol'e*: These decisions result in a substantial portion of
capital funds being bloc*ed in long-term pro+ects

1iii0 Ris2 in'ol'e*: 1i)ed capital involves investment of huge amounts. It affects the returns
of the firm as a whole in the long-term. Therefore, investment decisions involving fi)ed capital
influence the overall business ris* comple)ion of the firm.
1i'0 I))e'e)si%le *ecisions :These decisions once ta*en, are not reversible without incurring
heavy losses.
FACTORS AFFECTING T8E REA7IREMENT OF FI@E( CAPITAL
1, Ntu)e o" #usiness: The type of business has a bearing upon the fi)ed capital
requirements. 1or e)ample, a trading concern needs lower investment in fi)ed assets
compared with a manufacturing organisation.
2, Scle o" Ope)tions: " larger organisation operating at a higher scale needs bigger plant,
more space etc. and therefore, requires higher investment in fi)ed assets when compared
with the small organisation.
., Choice o" Techni6ue: &ome organisations are capital intensive whereas others are labour
intensive. " capital-intensive organisation requires higher investment in plant and machinery
as it relies less on manual labour.
9, Technolo!y 7p !)*tion: In certain industries, assets become obsolete sooner.
$onsequently, their replacements become due faster. ,igher investment in fi)ed assets may,
therefore, be required in such cases.
:, G)o-th P)ospects: ,igher growth of an organisation generally requires higher investment
in fi)ed assets.
; ,(i'e)si"iction: " firm may choose to diversify its operations for various reasons, 0ith
diversification, fi)ed capital requirements increases.
<, Finncin! Alte)nti'es: " developed financial mar*et may provide leasing facilities as an
alternative to outright purchase. "vailability of leasing facilities, thus, may reduce the funds
required to be invested in fi)ed assets, thereby reducing the fi)ed capital requirements. &uch
a strategy is specially suitable in high ris* lines of business.
=, Le'el o" Coll%o)tion: "t times, certain business organisations share each other's
facilities. 1or e)ample, a ban* may use another's "TM or some of them may +ointly establish a
particular facility. &uch collaboration reduces the level of investment in fi)ed assets for each
one of the participating organisations.
BORKING CAPITAL REA7IREMENTS
5et wor*ing capital may be defined as the e)cess of current assets over current liabilities.
FACTORS AFFECTING BORKING CAPITAL REA7IREMENTS
1, Ntu)e o" #usiness: Trading /rganisations 6 !ess wor*ing capital
Manufacturing /rganisations 6 more wor*ing capital
2, Scle o" Ope)tions: !arge scale organizations 6 more wor*ing capital

&mall scale organizations 6 less wor*ing capital
., #usiness Cycle: %oom period - more wor*ing capita
.epression period - less wor*ing capital
9, Sesonl "cto)s: ea* season 6 more wor*ing capital
!ean season 6 less wor*ing capital
:, P)o*uction cycle: !onger production cycle 6 more wor*ing capital
&horter production cycle 6 less wor*ing capital
;, C)e*it llo-e*: $onservative#strict credit policy 6 less wor*ing capital
!iberal credit policy 6 more wor*ing capital
<, C)e*it 'ile*: If credit is available easily from suppliers - less wor*ing capital
If credit is not available easily from suppliers 6 more wor*ing capital
=, Ope)tin! e""iciency: If current assets are managed efficiently 6 less wor*ing capital
If current assets are not managed efficiently 6 more wor*ing capital
>, A'il%ility o" R- Mte)il: 2asy and timely availability of raw material 6 less wor*ing
capital
.ifficulty and lengthy time period are involved in getting raw materials 6 more wor*ing
capital
1?, G)o-th P)ospects: If there is possibility of growth potential - more wor*ing capital
If there is no possibility of growth 6 less wor*ing capital
11, Le'el o" Co$petition: If there is stiff and cut-throat competition 6 more wor*ing capital
!ess competition and monopoly li*e situation 6 less wor*ing capital
12, In"ltion : .uring inflation 6 more wor*ing capital
.uring recession 6 less wor*ing capital
FINANCIAL LE4ERAGE+CAPITAL GEARING+ TRA(ING ON EA7ITC
It is an assumption that by using fi)ed charge bearing securities in the capital structure
of a company, return to the equity shareholders can be increased. %ut this is possible only
when the rate of return of the company is higher than the rate interest which a company pays
on its debt capital.
1or e)ample a company has 3s.78 crores capital. /ption 7 the company uses only
equity capital /ption 9 the company uses :8; equity and :8; debt capital in its capital

structure. 3ate of interest on debt is 7:;. 3ate of Income-ta) is <8; . rofit before interest
and ta) is 3s.9 crores.
P)ticul)s Option 1 Option 2
rofit bebore interest and ta)es
-%IT(
9,88,88,888 9,88,88,888
!ess: Interest on debt ------------- 7:,88,888
rofit after ta) 9,88,88,888 7,=:,88,888
!ess: Income 6 ta) ><8; ?8,88,888 ::,:8,888
rofit after ta) and interest 7,@8,88,888 7,9A,:8,888
5o. of equity shares - 1B 3s.78
each(
98,88,888 78,88,888
3eturn to shareholders-2&( 3s. C 3s.79.A:

Auestions 1-ith so$e hints -he)e'e) necess)y0
I$po)tnt 6uestions )e sho-n -ith D $)2 n* the Most i$po)tnt 6uestions )e
sho-n -ith DD $)2
D1, N$e the chepest sou)ce o" "innce to co$pny, 1M
"ns. .ebt capital
2, N$e the *ecision to c6ui)e ne- n* $o*e)n plnt to up!)*e n ol* one, 1M
"ns. Investment decision
DD., Bht is $ent %y Cpitl St)uctu)eE 1M
DD9, Enu$e)te th)ee i$po)tnt *ecisions t2en in "inncil $n!e$ent, 1M
:, Bht is the lin2 %et-een ope)tin! cycle n* -o)2in! cpitlE 1M
DD;, Cn) #n2 -nts to open ne- %)nch o" his %n2E Bht is this *ecision clle*E 1M
"ns. Investment decision
D<, Bht is the cost o" )isin! "un*s clle*E 1M
"ns. 1loatation cost
=, Bhy in'esto)s -nt *i'i*en*E 1M
>, (e"ine %usiness "innce, 1M
1?, 8o- the EPS is co$pute*E 1M
"ns. 2arnings available for equity shareholders#5o. of equity shares
11, 8o- the Inte)est Co'e)!e Rtio is co$pute*E 1M
"ns. 2%IT#Interest
12, 8o- the Retu)n on In'est$ent is co$pute*E 1M
"ns. 2%IT#$apital 2mployed D 788

D1., Bhich is the $ost costly cpitl "o) co$pnyE 1M
"ns. 2quity share capital
19, N$e the concept -hich inc)eses the )etu)n on e6uity sh)es -ith chn!e in the
cpitl st)uctu)e o" co$pny, 1M
"ns. Trading on 2quity
DD1:, Stte -hy the -o)2in! cpitl nee*s "o) FSe)'ice/in*ust)yG )e *i""e)ent ")o$
tht o" Mnu"ctu)in! in*ust)y, 1M
"ns. &ervice industries need less wor*ing capital because they do not require any inventory.
They do not have any manufacturing process.
DD1;, N$e ny t-o essentil in!)e*ients o" soun* -o)2in! cpitl $n!e$ent, 1M
"ns. Inventory, debtors
DD1<, FCost o" *e%tG is lo-e) thn the Fcost o" e6uity sh)e cpitlG Gi'e )esons -hy e'en
then co$pny cnnot -o)2 only -ith the *e%t, 1M
"ns. " company cannot e)ist without equity share capital
D1=, Bht is $ent %y G)oss -o)2in! cpitlE 1M
"ns. Total investment on current assets -$urrent liabilities should not be deducted(
1>, N$e tht po)tion o" cu))ent ssets -hich is "innce* %y "i3e* li%ilities, 1M
"ns. 5et wor*ing capital
2?, Bhy is -o)2in! cpitl nee*e*E Gi'e ny one )eson, 1M
"ns. It is required to meet day to day e)penses.
21, (iscuss t-o o%&ecti'es o" "inncil plnnin!, .M
22, Bht is "inncil )is2E Bhy *oes it )iseE .M
2., (e"ine cu))ent ssets n* !i'e "ou) e3$ples, .M
29, Finncil $n!e$ent is %se* on th)ee %)o* "inncil *ecisions, Bht )e theseE .M
DD2:, Bht is the $in o%&ecti'e o" "inncil $n!e$entE .M
2;, (iscuss %out -o)2in! cpitl ""ectin! %oth li6ui*ity s -ell s p)o"it%ility o"
%usiness, .M
,int: The wor*ing capital should neither be more or less than required. %oth these situations
are harmful. It is considered as a necessary evil.
2<, 8o- *oes cost o" cpitl ""ect the cpitl st)uctu)e o" co$pnyE .M
D2=, HSoun* Finncil Mn!e$ent is the 2ey to the p)ospe)ity o" %usiness: E3plin .M
,int: 3ole of financial management
D2>, E3plin the "cto)s ""ectin! the in'estin! *ecision o" co$pny, .M

.?, Stte the t-o i$po)tnt o%&ecti'es o" "inncil plnnin!, .M
,int: i( To ensure timely availability of finance ii( To ensure proper balance of finance.
.1, E3plin the $enin! o" Fi3e* Cpitl, E3plin ny t-o "cto)s tht *ete)$ine the
"i3e* cpitl o" co$pny, .M
.2, Bht is the )ole o" FLesin!G in *ete)$inin! the )e6ui)e$ent o" "i3e* cpitlE .M
.., FFi3e* cpitl *ecisions in'ol'e $o)e )is2G 8o-E .M
.9, 8o- Fscle o" ope)tionsG ""ect the )e6ui)e$ent o" "i3e* cpitlE .M
.:, Len!th o" p)o*uction cycle ""ects the -o)2in! cpitl )e6ui)e$ents o" n
o)!nistion, E3plin .M
.;, 8o- )e FG)o-th P)ospectsG )elte* -ith the )e6ui)e$ent o" -o)2in! cpitlE .M
.<, 8o- *oes FRis2 consi*e)tionG ""ect the cpitl st)uctu)e *ecisionE .M
.=, 8o- FCpitl St)uctu)e o" othe) co$pniesG ""ects the cpitl st)uctu)e *ecisionE .M
.>, Bht *o you $en %y Finncil Le'e)!eE .M
,int: Trading on equity
9?, E3plin the FE)nin!s #e"o)e Inte)est n* T3esG / E#IT .M
91, HSh)e Cpitl is %ette) thn *e%t cpitlI In the "'ou) o" this stte$ent e3plin
one "cto) -hich ""ects the cpitl st)uctu)e, .M
,int: $ash flow position or other relevant point which favours equity capital
92, Bhen *e%t cpitl is chepe) thn the e6uity cpitlJ -hy *onGt co$pnies !o "o)
*e%t cpitl loneE .M
,int: " public company cannot be incorporated without equity share capital
9., 8o- the cont)ol o" e3istin! sh)ehol*e)s ""ectsE 8o- this sitution cn %e
'oi*e*E .M
,int: This situation can be avoided by raising debt capital rather than equity capital
99, HT3 %ene"it is 'il%le only in cse o" py$ent o" inte)est n* not on the py$ent
o" p)e"e)ence *i'i*en* HBhy .M
,int: Interest on debt only ta) deductable e)pense but not preference dividend.
9:, FCpitl st)uctu)e *ecision is essentilly opti$iKtion o" )is2/)etu)n )eltionshipG
Co$$ent 9M
9;, A Cpitl %u*!etin! *ecision is cp%le o" chn!in! the "inncil "o)tune o"
%usiness, (o you !)eeE Bhy o) Bhy notE 9M
9<, Bht is the i$po)tnce o" cpitl %u*!etin! *ecisionsE 9M
DD9=, To 'oi* the p)o%le$s o" sho)t!e n* su)plus o" "un*s -ht is )e6ui)e* in
"inncil $n!e$entE N$e the concept n* e3plin its ny th)ee points o"
i$po)tnce, 9M

,int: 1inancial lanning.
9>, E3plin %)ie"ly ny "ou) points o" the )ole o" "inncil $n!e$ent, 9M
:?, To tc2le the unce)tinty in )espect o" 'il%ility n* ti$in!s o" "un*s -ht is
)e6ui)e*E N$e the concept in'ol'e* n* e3plin its th)ee points o" i$po)tnce, 9M
,int: 1inancial planning
DD:1, N$e the p)ocess -hich helps in *ete)$inin! the o%&ecti'esJ policiesJ p)oce*u)esJ
p)o!)$$es n* %u*!ets to *el -ith the "inncil cti'ities o" n ente)p)ise, E3plin
its th)ee points o" i$po)tnce, 9M
,int: 1inancial lanning
:2, E3plin %y !i'in! ny "ou) )esonsJ -hy cpitl %u*!etin! *ecisions )e i$po)tnt, 9M
:., Bht is the $enin! o" Finncil Plnnin!E Bhy is it i$po)tntE Gi'e ny t-o
)esons, 9M
DD:9, E3plin the "cto)s ""ectin! the *i'i*en* *ecision, :M
DD::, E3plin the te)$ FT)*in! on E6uityG, BhyJ Bhen n* 8o- it cn %e use* %y
%usiness o)!nistionE :M
:;, HA soun* "inncil pln is the 2ey to success o" soun* "inncil $n!e$ent o" the
co$pnyI (iscuss :M
,int: Importance of 1inancial lanning.
D:<, 8o- cn the )etu)n on e6uity %e inc)ese* %y usin! *e%t in the cpitl st)uctu)eE
Illust)te -ith suit%le e3$ple, :M
,int: Trading on equity.
:=, HFinncil plnnin! *oes not se)'e ny use"ul pu)poseI Co$$ent :M
,int: 5o, 2)plain the importance
DD:>, A %usiness$n -ho -nts to st)t $nu"ctu)in! conce)n pp)oches you to
su!!est hi$ -hethe) the "ollo-in! $nu"ctu)in! conce)ns -oul* )e6ui)e l)!e o)
s$ll -o)2in! cpitl:
i0 #)e* ii0 Su!) iii0 Fu)nitu)e $nu"ctu)in! !inst speci"ic o)*e) i'0 Cool e)s '0
Moto) C) :M
,int: i( %read 6 less ii( &ugar 6 More iii( 1urniture manufacturing against specific order 6
less iv( $oolers 6 More v( Motor $ar - More.
;?, Bht is $ent %y "inncil $n!e$entE E3plin ny th)ee *ecisions in'ol'e* in it, :M
DD;1, E3plin the $enin! o" "i3e* cpitl, #)ie"ly e3plin ny "ou) "cto)s tht
*ete)$ine the "i3e* cpitl o" co$pny, :M
;2, E3plin ny "i'e "cto)s -hich ""ect the *i'i*en* policy o" co$pny, :M
;., HFinncil Plnnin! *oes not se)'e ny use"ul pu)poseI Co$$ent :M

;9, 8o- )e sh)ehol*e)s li2ely to !in -ith lon co$ponent in the cpitl e$ploye*E
#)ie"ly e3plin :M
,int: Trading on equity
DD;:, H(ete)$inin! the o'e)ll cost o" cpitl n* the "inncil )is2 o" the ente)p)ise
*epen*s upon ')ious "cto)s,I E3plin ny "i'e such "cto)s, :M
,int: 1actors affecting capital structure
DD;;, Cou )e Finnce Mn!e) o" ne-ly est%lishe* co$pny, The (i)ecto)s h'e
s2e* you to *ete)$ine the $ount o" Fi3e* Cpitl )e6ui)e$ent "o) the co$pny,
E3plin ny "ou) "cto)s tht you -ill consi*e) -hile *ete)$inin! the "i3e* cpitl
)e6ui)e$ent "o) the co$pny, ;M
DD;<, Bht is -o)2in! cpitlE 8o- is it clculte*E (iscuss "i'e i$po)tnt
*ete)$innts o" -o)2in! cpitl )e6ui)e$ents, ;M
DD;=, E3plin ny si3 "cto)s -hich ""ect the cpitl st)uctu)e o" co$pny, ;M
DD;>, Bht is "i3e* cpitl $n!e$entE E3plin ny "i'e "cto)s *ete)$inin! the
$ount o" "i3e* cpitl, ;M
<?, Bht is $ent %y "inncil $n!e$entE E3plin its )ole, ;M
DD<1, E3plin ny si3 "cto)s ""ectin! the "inncin! *ecision o" co$pny, ;M
<2, E3plin ny si3 "cto)s ""ectin! the *i'i*en* *ecision o" co$pny, ;M
<., Bht *o you $en %y "inncil plnnin!E (iscuss the i$po)tnce o" "inncil
plnnin! in "inncil $n!e$ent, ;M
<9, The #o)* o" (i)ecto)s hs s2e* you to *esi!n the cpitl st)uctu)e o" the
co$pny, E3plin ny si3 "cto)s tht you -oul* consi*e) -hile *oin! so, ;M
<:, H(ete)$intion o" cpitl st)uctu)e o" co$pny is in"luence* %y nu$%e) o"
"cto)sI E3plin ny "ou) such "cto)s ;M