Question

You own a business and need to constantly make financial decisions.  What are the three types of financial management decisions? For each type of decision, give an example of a business transaction that would be relevant in your business.

Answer 1

The three types of financial management decisions are capital budgeting, capital structure, and working capital management. A business transaction that would include capital budgeting is if your company should open another store or not. A business transaction that would include capitalstructure is deciding whether to issue new credit to pay off old debts. A business transaction that would include working capital management is seeing if we should extend credit to a customer.

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