"The Financial Consultant advised her about the judicious mix of equity (40%) and Debt (60%)." Identify the concept of Financial Management as reflected in the above situation.
Show Hint
A mix of debt and equity is called capital structure.
Step 1: Spot the clue in the case:
Look at the numbers: 40 percent and 60 percent, split between owners' money and loan money.
Step 2: Recall the related idea:
When a firm decides how to divide its long term funds between own money and borrowed money, that split is called its capital structure.
Step 3: Test option (A).
Investing means choosing assets to buy with the funds. The case does not say what is bought, so this is not the idea.
Step 4: Test option (B).
The words equity and debt with percentages describe the funding mix. This is the capital structure, so it fits.
Step 5: Test option (C).
Dividends are payouts to shareholders from profit. The line is silent on payouts, so this does not fit.
Step 6: Test option (D).
Finance outlay is not a recognised decision area in the syllabus, and the line is not about spending. We reject it.
Final Answer:
A funding mix of 40 percent equity and 60 percent debt is the capital structure, option 2.
\[ \boxed{\text{Option 2}} \]
