Types of finance functions/ decisions, Financial Management

Assignment Help:

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.

Related Discussions:- Types of finance functions/ decisions

Floating rate notes (frns), Floating Rate Notes (FRNs): When interest r...

Floating Rate Notes (FRNs): When interest rates are high and the general outlook is either stable or indicating the possibility of a downward trend in return, then an investor

Seasonal variation in time series analysis, Seasonal Variation Under th...

Seasonal Variation Under this variation, we observe that the variable under consideration shows a similar pattern during certain months of the successive years. An example of s

Miller orr model, exercise

exercise

Role of market efficiency, Role of market efficiency: Market efficiency...

Role of market efficiency: Market efficiency signifies how ‘quickly and accurately' does relevant information have its effect on the asset prices. Depending upon the degree of

The main characteristics of debt and equity, QUESTION i) Distinguish be...

QUESTION i) Distinguish between intermediated and market finance using illustrative examples. ii) Differentiate between the main characteristics of Debt and Equity. iii)

Objectives and functions of asic, Objectives and Functions of ASIC The ...

Objectives and Functions of ASIC The objective of ASIC is to ensure the confident and informed participation of consumers in the financial system. To attain this objective, it

Net present value of of the investment, Air Manchester (AM) is a new ...

Air Manchester (AM) is a new airplane manufacturer. It is considering investing in a software package, e.g. SAS, which would make its daily operations more efficient

Pay in interest over first year of its eurodollar loan, A company borrows $...

A company borrows $1,500,000 at LIBOR plus a lending margin of 1.25 percent per year on a six-month rollover basis from a London bank. If six-month LIBOR is 4 ½ % over the first s

Mortgages, A mortgage may be defined as a pledge of property ...

A mortgage may be defined as a pledge of property to secure a debt payment; in this context, we will use the term property to mean real estate. If the

Mr.Manikanta, can u tell me the various approaches followed by FMCG Compani...

can u tell me the various approaches followed by FMCG Companies in test markets

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages