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What Are the Key Aspects of Financial Decision-making? - Entrepreneurship

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Short Note

 What are the key aspects of financial decision-making?

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Solution

The key aspects of financial decision-making relate to investment, financing and dividends. Investments must be financed in some way however there are always financing alternatives that can be considered.
For example, it is possible to raise finance from selling new shares, borrowing from banks or taking credit from suppliers:

  1. A key financing decision is whether profits earned by the business should be retained rather than distributed to shareholders via dividends.
  2. If dividends are too high, the business may be starved of funding to reinvest in growing revenues and profits further.
Concept: Budgeting and Managing the Finances
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APPEARS IN

CBSE Class 12 Entrepreneurship Textbook
Chapter 5 Business Arithmetic
Short answer (exceed 75 words) | Q 2 | Page 208
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