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.

Solutions

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

Next > < Previous

Related Solutions

EXAMINE the RELATIONSHIP between investment decisions, dividend decisions and financing decisions in the context of financial...

EXAMINE the RELATIONSHIP between investment decisions, dividend decisions and financing decisions in the context of financial management, illustrating your discussion with examples(100marks) Please answer this question with more flesh because 3 full pages are required.

Explain the meaning of the "capital budgeting" decisions and compare them with the "financing decisions" of...

Explain the meaning of the "capital budgeting" decisions and compare them with the "financing decisions" of a firm. Who is typically in charge of each type of decision responsibility within the firm?

Discuss why capital budgeting decisions are the most important investment decisions made by a company’s management.

Capital Budgeting is one of the crucial decisions of the financial management. Explain the significant process...

Capital Budgeting is one of the crucial decisions of the financial management. Explain the significant process of capital budgeting at the time of implementing a new project.

Explain what is the dividend decision and financing decision and investment decision in financial management giving...

Explain what is the dividend decision and financing decision and investment decision in financial management giving examples (100)marks

What is capital budgeting? Why are capital budgeting decisions crucial to the long run financial health...

What is capital budgeting? Why are capital budgeting decisions crucial to the long run financial health of a business enterprise? List Shortcomings of using the payback period as the only criteria in making capital budgeting decisions. Discuss Some capital investment projects in which non-financial factors may outweigh financial factors. (Include references)

Capital budgeting is vital in public finance decisions. Decisions on capital project investment, discuss three criteria...

Capital budgeting is vital in public finance decisions. Decisions on capital project investment, discuss three criteria that are used to evaluate capital budgeting projects

Categorize these transactions into Capital Budgeting, Capital Structure, and Working Capital Management decisions by putting (CB),...

Categorize these transactions into Capital Budgeting, Capital Structure, and Working Capital Management decisions by putting (CB), (CS), or (WCM) by each item: (10 points) A company purchasing a new fleet of corporate vehicles. A company divesting (spinning off) a business line A company repurchasing its own stock back from stockholders A company paying off its bondholders early A company demanding early payment on its accounts receivable 1A) How much should I sell my car for in 5 years if I...

1. Are the following capital budgeting or financing decisions? A. Intel decides to spend $1 billion...

1. Are the following capital budgeting or financing decisions? A. Intel decides to spend $1 billion to develop a new microprocessor. B. Avon spends $200 million to launch a new range of cosmetics in US markets. C. Pfizer issues new shares to buy a small biotech company. D. Toyota borrows 350 million yen from Bank of Tokyo. 2. Would the following activities increase or decrease the firm’s cash balance? A. Inventories are increased. B. Accounts payable are decreased. C. Additional...

(Divisional costs of capital and investment decisions) In May of this year, Newcastle Mfg. Company's capital...

(Divisional costs of capital and investment decisions) In May of this year, Newcastle Mfg. Company's capital investment review committee received two major investment proposals. One of the proposals was put forth by the firm's domestic manufacturing division, and the other came from the firm's distribution company. Both proposals promise a return on invested capital to approximately 15 percent. In the past, Newcastle has used a single firm-wide cost of capital to evaluate new investments. However, managers have long recognized that...

Subjects