Question

Every manager has to take three major decisions while performing the role of finance manager. Explain.

Answer 1

A manager must take the following major decisions:-

1) Financing Decision: This decision is about the quantum of finance to be raised from various long-term sources and short-term sources, and selecting the best ones.

2) Investment Decision: Investment decision revolve around decisions of judicious investment of firm's resources, from the available alternative proposals and choosing the cheapest one, which earns highest possible returns for the investors.

3) Dividend Decision: Dividend decision revolves around whether to distribute earnings to shareholders as dividends or to retain earnings to finance long-term prospects of the firm.