Advertisements
Advertisements
Question
What is meant by ‘Investment Decision’?
Advertisements
Solution
The process of deciding where to distribute capital in order to earn returns is referred to as an investment choice. Investment decisions in business might involve the purchase of new assets, the expansion of activities, or the purchase of securities such as stocks and bonds.
- Long-term investing decisions entail allocating cash over the course of several years or more. Long-term investment decisions can involve purchasing new equipment or machinery, increasing a company's physical base, or investing in research and development.
-
Short-term investing decisions entail allocating funds for a period of time of one year or less. While short-term investment decisions typically include less capital and have less of an impact on a company's overall strategy, they still may have a significant impact on its liquidity and cash flow.
APPEARS IN
RELATED QUESTIONS
| Myra Ltd. manufacturing televisions is planning to expand its business and requires ₹250 crores for the same. A number of projects are available for the company to invest in and each project has to be evaluated carefully. The Finance Manager of the company has assessed the projects in terms of the rate of return from each project and wanted to select the one with the higher rate of return. But before selecting the project he has to take into consideration other factors also. |
- Identify and state the financial decision discussed in the above paragraph.
- Explain the other factors that the Finance Manager should consider before selecting the project.
State how 'Long term Investment Decision' and 'Short term Investment Decision' affect the business.
Which core financial management decision addresses where to invest funds?
Which core financial management decision addresses how to raise funds?
Which core financial management decision addresses how to distribute profits?
What is the aim when firms choose where to invest scarce funds?
What does the investment decision allocate funds to?
Into which two types are investment decisions divided?
What is another name for a Long-term Investment Decision?
What is the key focus of a Short-term Investment Decision?
How are Capital Budgeting decisions described in terms of reversibility?
What is required before committing funds to Capital Budgeting decisions?
Which effects are associated with Capital Budgeting decisions?
On what basis are projects compared when considering the rate of return?
When risk is the same, which project is preferred?
What is key to sound working capital management?
