1.6 : 财务管理决策

Financial management involves decisions related to the financial resources of an organization to achieve its objectives.

There are three main types of decisions in financial management.

These include capital budgeting, financing, and working capital management.

Capital budgeting relates to investment decisions in long-term assets like purchasing new equipment or expanding operations.

Financing decisions focus on raising funds through stocks, bonds, or loans to finance investments or operations.

Working capital management decisions involve managing the day-to-day finances of a company, such as cash flow, inventory levels, accounts receivable, and accounts payable.

For example, a shoe manufacturing company plans to buy new machinery, which requires capital budgeting decisions.

So, the company analyzes the potential costs and returns on new investments.

As a part of its financing decision, it plans to take a loan from a bank.

In terms of working capital management, the company needs to manage its inventory levels and cash flow carefully.

With effective financial management decisions, the manufacturing company can successfully improve its business operations.