The Investment Decision: - Investment decision as well known as 'Capital Budgeting' is related to the selection of long-term assets or else projects in which investments will be made by the business. The Long term assets are the assets which would yield reimbursement over a period of time in future.
The Financing Decision: - This function is related to increasing of finance from different sources. For this reason the financial manager is to determine the proportion of debt as well as equity. In other sense there are two sources of finance
(i) Debt:- Debt signifies long term loans and includes:
- Debentures
- Loan from Bank
- Loan from Financial Institutions
- Mortgage Loans
(ii) Equity: Equity demotes to shareholder's funds and includes:
- Equity Share Capital
- Preference Share Capital
- Reserve
- Accumulated Profits