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
Short Term Solvency or Liquidity Ratio's   CR:          The Current Ratio is calculated by current assets to current liabilities and is the index of company's financial stab

Question 1 Describe the importance of commodity finance and sensitive commodities Question 2 Securities purchased by a bank for investment purposes are referred to as seconda

Chu Chu Train Systems is expected to pay a $3.25 annual dividend (D1 = $3.25), the dividend is expected to grow at a constant rate of 5.50% a year, and the common stock currently s

Break-Even Point The measure of products or services organizations must sell for its revenue from sales to equal its cost of production for the same number of units. Hence, se

At the end of March, 20X6 the balances in the several accounts of Nitin & Company are as follows:

What are agency problems? and between what two stakeholders do agency problem typically occur?

I need this in the next 24 hours urgently. If you can accept this, you must be meeting the deadline with strictly no delays or full payment refund is needed

Q. Describe about Accountants Report? Accountants' Report - Formal document which communicates an independent accountant's: (1) expression of limited assurance on FINANCIA

Why the term objective is used for The term is used in a rather narrow sense of what a firm must attempt to achieve with its financing, investment and dividend policy decisions

Suggestion regarding Credit limit. Should it be approved or not, what should be the amount of credit limit that electronics give to Booth Plastics.