There are 3 types of Financial Management Decisions, these are the Investment Decision, Financing
Decision, and Dividend Decision. To begin with, the Investment decision is the process of selecting which
assets to purchase using the firm's money, it can be long-term or short-term. Capital budgeting
decisions are long-term investment choices that entail considerable sums of money and are not
reversible except at a significant expense. Working capital decisions are short-term investment choices
that have an impact on how a business operates on a daily basis. It also contains choices regarding the
quantities of cash, inventories, and receivables. A bad working capital decision affects the liquidity and
profitability of a business. While Financing Decision is concerned with how much money will be raised
from various long-term sources of funding, such as equity shares, preferred shares, debentures, bank
loans, etc. It is related to the financing mix or capital structure or leverage. Whereas Dividend Decision is
concerned with determining how much of the company's profit should be maintained for future
unforeseen circumstances (retained earnings) and how much should be delivered to shareholders
(dividend). It relates to dividend policy. Dividend is a part of profits, which are available for distribution
to equity shareholders.