Financial analysis of a business is an important part tool in the decision making process by...

Financial analysis of a business is an important part tool in the decision making process by the management of a company. Identify and discuss the types of decisions that management may develop from financial analysis.

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Expert Solution

Some of the decisions that the management may develop from financial analysis are:

1. Investment decisions: These decisions are primarily focused on making new investments in the business , the cash flows and profits that are expected to be generated. These are taken through a process known as capital budgeting.

2. Dividend decisions: The dividend decisions involve deciding the dividend payout ratio and retained earnings that the company needs for future.

3. Financing decisions: This involves decisions regarding the source of funds through which the company will be financed i.e. weighing options between equity and debt and weighted average cost of capital.

jeff jeffy answered 1 year ago

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