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Explain various financial decisions ( investment decisions: long term ,short term, financing decisions, dividend policy decisions)?
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Explain various financial decisions ( investment decisions: long term ...
Investment Decisions
Investment decisions involve allocating resources to various assets to generate returns. These can be classified into two categories:
Financing Decisions
Financing decisions determine how a business raises capital to fund its operations and investments. Key aspects include:
Dividend Policy Decisions
Dividend policy decisions revolve around how much profit is distributed to shareholders versus reinvested in the company. Key considerations include:
Understanding these financial decisions is crucial for effective financial management and achieving business objectives.
Investment decisions involve allocating resources to various assets to generate returns. These can be classified into two categories:
- Long-Term Investment Decisions:
- Focus on assets held for more than a year.
- Examples include purchasing machinery, real estate, or entering new markets.
- Aim for capital appreciation and long-term growth. - Short-Term Investment Decisions:
- Focus on assets held for less than a year.
- Examples include stocks, bonds, or treasury bills.
- Aim for liquidity and quick returns.
Financing Decisions
Financing decisions determine how a business raises capital to fund its operations and investments. Key aspects include:
- Equity Financing:
- Raising funds by selling shares of the company.
- Involves sharing ownership and profits with shareholders. - Debt Financing:
- Borrowing funds through loans or issuing bonds.
- Requires repayment with interest, impacting cash flow.
Dividend Policy Decisions
Dividend policy decisions revolve around how much profit is distributed to shareholders versus reinvested in the company. Key considerations include:
- Retention Ratio:
- The portion of earnings retained for reinvestment.
- Higher retention can fuel growth but may disappoint income-focused investors. - Dividend Payout Ratio:
- The proportion of earnings paid out as dividends.
- A balanced approach can satisfy both growth and income investors.
Understanding these financial decisions is crucial for effective financial management and achieving business objectives.
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Explain various financial decisions ( investment decisions: long term ,short term, financing decisions, dividend policy decisions)?
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Explain various financial decisions ( investment decisions: long term ,short term, financing decisions, dividend policy decisions)? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Explain various financial decisions ( investment decisions: long term ,short term, financing decisions, dividend policy decisions)? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Explain various financial decisions ( investment decisions: long term ,short term, financing decisions, dividend policy decisions)?.
Explain various financial decisions ( investment decisions: long term ,short term, financing decisions, dividend policy decisions)? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Explain various financial decisions ( investment decisions: long term ,short term, financing decisions, dividend policy decisions)? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Explain various financial decisions ( investment decisions: long term ,short term, financing decisions, dividend policy decisions)?.
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