Top 3 Best Financial Decisions

 In the beginning financial management was limited to the collection of funds. But in modern times, a financial manager has to make financial decisions in addition to the collection of money, proper utilization of money collected, planning, control, conservation of capital, and equitable distribution of income. The success of a business depends on sound financial decisions. Business finance management functions are mainly concerned with financial decisions.

According to James C. Van Horne, there are 3 financial management decisions namely:
1. Investment decisions, 
2. Financing decisions and 
3. Dividend Decision



1. Investment Decision:

 The most important decor a financial manager is the investment decision. Achieving the desired goals of the business is possible by using the limited funds of the business properly.

Investment decisions can be divided into 2 parts:

(I) Capital Budgeting decisions:

Long-term investment decisions are made through capital budgeting. This decision is related to the selection of property and investment decisions.


ii) Working Capital Management:

One of the most important aspects of financial management is working capital management. proper and effective capital management is a prerequisite for the long-term success of the organization.



2. Financing Decision: 

A financing decision is the mix of financing, capital structure, or leverage decision for the company concerned the financial manager can increase the share market value by determining the capital structure.

3. Dividend Decision: 

The ratio of how much profit will be distributed among the shareholders, and how much will be retained in the business is the dividend policy decision. Both distributions among share owners and the preservation of business are necessary for the improvement of the organization.