Which of the following is correct?

The primary objective of financial management is to arrange wealth for shareholders. Financing decision is the decision about dividend payment and retained earnings. Return on investment shows profitability of an investment. Return on investment shows analysis of an investment.

Return on investment shows profitability of an investment.

The primary aim of financial management is to maximise ( and not arrange)shareholders’ wealth, which is referred to as the wealth-maximisation concept. Financing Decision : This decision is about the quantum of finance to be raised from various long-term sources. Short-term sources are studied under the ‘working capital management’. It involves identification of various available sources. ROI tries to directly measure the amount of return on a particular investment, relative to the investment's cost. Thus, Option 3 is correct.