State the major decision of financial management
The major decision of financial management is the decision relating to dividend policy. The dividend must be analysed in relation to financing decision of a firm. Two alternatives are available in dealing with profits of a firm: they can be distributed to shareholders in the form of dividends or they can be retained in business itself. Decision as to which course must be followed relies largely on a significant element in dividend decision, dividend pay-out ratio, that is, what proportion of net profits must be paid out to the shareholders. Final decision will depend upon preference of the shareholders and investment opportunities available within firm. The aspect of dividend decision is the factors determining dividend policy of a firm in practice.