2.4.3 - Provision for Redemption
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Practice Questions
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What does 'redemption' refer to in finance?
💡 Hint: Think about loans companies take.
Name one method of redeeming debentures.
💡 Hint: How can a company return borrowed money?
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is a Debenture Redemption Reserve?
💡 Hint: Focus on its purpose to protect the company’s obligations.
True or False: Companies can only redeem debentures as one lump sum.
💡 Hint: Think about flexible repayment options.
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Challenge Problems
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A company plans to redeem ₹1,00,000 of its debentures using lump sum payment but unexpectedly faces cash flow issues. Discuss how this impacts their financial statements.
💡 Hint: Consider the impact on the cash flow statement and how it reflects overall company health.
Explain how the provision for redeemable debentures can affect a company’s long-term financial planning.
💡 Hint: What long-term steps must management consider with these debts on its books?
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