What are the key responsibilities that consumers must fulfill to ensure they are protected under Consumer Protection Act?

Q.1. What are the key responsibilities that consumers must fulfill to ensure they are protected under Consumer Protection Act?

Ans: 1. As consumers, it is crucial to make informed decisions before purchasing goods or services. Take the time to research and gather relevant information about the product or service, its features, pricing, and the reputation of the seller or service provider. Being well-informed empowers you to make the right choices and avoid any potential pitfalls.

2. Before entering into any consumer transaction, carefully read and
understand the terms and conditions. This includes contracts, warranties, and refund policies. By being aware of the terms, you can avoid surprises and potential disputes later on.

3. Ensure that the information you provide during a transaction, such as your name, contact details, and payment information, is accurate and truthful. This helps facilitate smooth transactions and prevents any complications that may arise from incorrect information.

4. If you come across a product that is defective, unsafe, or does not meet the promised standards, it is essential to report the issue to the seller or manufacturer promptly.

5. As a responsible consumer, exercise caution while sharing personal
information online, and only transact on secure and reputable websites. Be wary of potential scams and phishing attempts.

6. If you encounter any issues or dissatisfaction with a product or service, address the concern with the seller or service provider promptly. Delaying the reporting of grievances may limit your options for redressal.

7. Keep a record of receipts, invoices, warranties, or any other documents related to your purchases. These documents serve as evidence in case of disputes or when seeking a refund or replacement.

8. Should a dispute arise, cooperate with consumer redressal forums or agencies when seeking resolution. Provide necessary information and attend hearings or proceedings as required.

Q.2. Sameer has been given a task of evaluating the financial performance of two companies, Alfa Ltd. and Beltex Ltd., in the same industry. Both companies have been trading on equity as part of their financial strategy. Given is the information that Sameer received. Which company is using trading on equity more effectively?
Alfa Ltd.:
Total Assets: Rs. 500,000
Equity Capital: Rs. 300,000
Debt Capital: Rs. 200,000
Net Income: Rs. 50,000
Beltex Ltd:
Total Assets: Rs. 800,000
Equity Capital: Rs. 400,000
Debt Capital: Rs. 400,000
Net Income: Rs. 60,000

Ans: To determine which company is using trading on equity more effectively, compare their Return on Equity (ROE) ratios. ROE is a key financial ratio that measures how efficiently a company is using its shareholders’ equity to generate profits.
ROE is calculated as follows:
ROE = (Net Income / Average Shareholders’ Equity) * 100
Calculate the ROE for both companies:
For Alfa Ltd :
ROE = (50,000 / (300,000 + 0) / 2) * 100
ROE = (50,000 / 300,000) * 100
ROE = 0.1667 * 100
ROE = 16.67%
For Beltex Ltd :
ROE = (60,000 / (400,000 + 0) / 2) * 100
ROE = (60,000 / 400,000) * 100
ROE = 0.15 * 100 ROE = 15.00%
Now, let’s compare the ROE ratios for both companies:
Alfa Ltd has an ROE of 16.67%, and Beltex Ltd has an ROE of 15.00%.
Answer: Based on the provided financial data, Alfa is using trading on
equity more effectively than Beltex. Alfa’s higher ROE of 16.67% indicates
that it is generating a better return on its shareholders’ equity compared to Beltex, which has an ROE of 15.00%.
This suggests that Alfa is utilising its equity more efficiently to generate profits, making its trading on equity strategy more effective.

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