Discuss the three broad areas of Financial Decision Making

Three broad areas of financial decision making are capital budgeting, capital structure and working capital management. Capital budgeting The first and most important decision that any firm has to make is to define the business or business that it wants to be in. this is reffered to as strategic planning and it has a significant bearing on how capital is allocated in the firm. As strategic planning calls for evaluating costs and benefits spread out over time, it is essentially a financial decision process. Capital structure Once a firm has decided on the investment projects it want to undertake, it has to figure out ways and means of financing them. The key issues in capital structure decision are: what is the optimal ...