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Debt

Equity

Loan

Mortgage

6 year

3 year

01 year

2 year

Less working capital

More working capital

No working capital

Negative working capital

Equity share

Debentures

Retained profits

Equity shares and preference shares

Choice of technique

Growth prospects

Technology upgradation

Scale of operation

Dividend decision

Capital budgeting decision

Working capital decision

Financing decision

These decisions are very crucial for any business since they affect its long run earning capacity

The size of assets, profitability and competitiveness are all affected by these decisions

These are concerned with levels of cash, inventory and recievable

These decisions are irreversible except at a huge cost.

Lower amount of earnings, stable earning, potentials, no shortage of cash, easy access to capital market

Restrictive clauses imposed by lender, low access to capital market, falling short of cash, good growth opportunities available.

Short of cash, good growth opportunities available, low access to capital market, enjoys stable earnings

Unstable earnings, falling short on cash, easy access to capital market, lower amount of earning

Financial management

Financing decision

Financial Planning

Capital Budgeting

Decreases its capacity to employ higher debt

Increases its capacity to employ higher debt

Can or employ any amount of debt available from market

Unable to raise any amount of debt

A, B, C, D and E

E, B, C, A and D

E, C, D, B and A

E, D, C, B and A