Retained earning is a part of profit which is not distributed among shareholders as dividends but is retained in the business for future use. It is also known as self financing. It is available free of cost for the business.The cheapest source of finance is:

Financial leverage is the degree to which a company uses fixed-income securities such as debt. Therefore, financial leverage is favorable when the uses to which debt can be put generate returns (ROI) greater than the interest expense associated with the debt (Cost of Debt).

Companies with higher growth opportunities tend to retain more money out of their earnings so as to finance the required investments. Therefore, higher growth prospects result in lower dividend payment.

Long term investment decision involves committing the finance on a long term basis. It is also known as capital budgeting decision.

These are the assets which can be converted into cash and cash equivalents within one year in the normal routine of business. e.g. inventories, debtors, bills receivable etc.

Diversification is not a factor determining the capital structure.

These decisions are based on expected rate of return and risks involved from each proposal When a proposal involves huge cash flow in return it expects to generate cash flows Capital budgeting techniques are applied to each proposal before selecting a particular project. Amount of investment, interest rate etc should keep in mind.

Debt instruments like debentures, long-term loans, etc prove to be the cheapest source of finance since interest paid on them is a tax-deductible expense.

Gross working capital refers to the investment in all the current assets such as cash, bills receivable, prepaid expenses, inventories, etc. These current assets get converted into cash within a year.

True. DSCR is a measure of the cash flow available to pay current debt obligations.