Financial Management decisions may be broadly categorized into investment (capital budgeting), financing and dividend decisions. You...

Financial Management decisions may be broadly categorized into investment (capital budgeting), financing and dividend decisions.

You are required to explain each of the three (3) Financial Management decisions, giving appropriate examples.

Expert Solution

Three types of Financial management decision are as follows-

1. Investment decisions-investment decisions are related to the total investment in an company about the capital of the company and the asset structure of different companies as well as the risk exposes of those asset structure of the company and it is always about assets of the company and capital of the company in the long run

2. Financing decisions- these decisions are about how to finance various projects in an organisation and which of the project should be beneficial to the overall organisation so these are the decisions which are to be made by the various companies in their businesses which will help in maximization of overall growth.

Decisions related to investment in a project is example of Financing decision.

3.Dividend decision- It is related to payment of dividend and it is to be decided upon whether the company is making appropriate profits and it wants to reinvest it's profits so, it wants to distribute its profits because those company who will have a higher reinvestment rate of return will not be wanting to distribute dividend.

This can be exampled through payment of dividend.

jeff jeffy answered 1 year ago

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