Types of finance functions/ decisions, Financial Management

TYPES OF FINANCE FUNCTIONS/ DECISIONS

The most main decisions in finance relate to procuring funds, investing them in profitable projects or assets, operate for the year and at the same time take working capital decision (investment in current assets and current liabilities) and calculate operating profit and decide upon the form of dividend decision which will make the Equity holders happy and the business runs profitably.  These decisions are technically known as follows:

  • Financing decision - This decision is associated to long term borrowings of a business and covers several important concepts like Cost of capital, capital structure, EBIT-EPS analysis, Indifference point, Pecking order theory etc.
  • Investment decision - Capital budgeting decisions which is related to decisions regarding investment in fixed assets.
  • Working capital decision - These decisions are related to the investment in current assets and current liabilities and include several related decisional areas like Management of cash, receivables and inventory - deciding the optimum working capital requirements of a firm etc.
  • Dividend decision - These decisions are related to distribution of profit earned by a firm. As the firm does not have any option in payment of its cost to debt holders or preference holders, this decision belongs completely to equity share holders and covers several theories of dividend payment.
Posted Date: 10/15/2012 8:49:25 AM | Location : United States







Related Discussions:- Types of finance functions/ decisions, Assignment Help, Ask Question on Types of finance functions/ decisions, Get Answer, Expert's Help, Types of finance functions/ decisions Discussions

Write discussion on Types of finance functions/ decisions
Your posts are moderated
Related Questions
Application of Shareholder Value Maximization Framework   Factors affecting Shareholder's Value are: Capital Market Conditions Profitability à Includes factors li

Cash flow from investing activities The items included in this heading are: Cash payments Cash receipts Acquiring proper


The face value of the debt security can be thought of as the principal amount on which interest is paid by the issuer. It is the amount the issuer is willing to r

Company X is expected to maintain a constant 7% growth rate in their dividends, indefinitely. If company X has a dividend yield of 4%, what is the required return on their shares?

Explain Gresham’s Law. Answer:  Gresham’s law considers to the phenomenon that bad (abundant) money drives good (scarce) money out of circulation. This type of phenomenon was fre

Derive and illustrate the monetary approach to exchange rate determination. Answer: The monetary approach is related with the Chicago School of Economics.  It is relies on two

I need help solving problems for learning financial management?

ICQ's designed to: Identify possible areas of weakness. Discover existence of internal controls. Questions are framed to highlight situations where: NO su

Q. Allocation head for Revenue Expenditure? All revenue expenditure is recorded in revenue allocation registers by various heads of accounts classification, The expenditure on