Identify the correct statements in the context of financial decision:

(A) Financial decision includes investment decision, financing decision and dividend decision
(B) Short term investment decision is also known as 'capital budgeting decision"
(C) Short term investment decision is also known as "Working capital decision'
(D) Investment decision includes raising funds from equity or debt
(E) Investment decision includes short term and long term investment decision

Choose the correct answer from the options given below:

(A), (C) and (E) only

The correct answer is option 1- (A), (C) and (E) only.

(A) Financial decision includes investment decision, financing decision and dividend decision- This statement is true. Financial Management is concerned with optimal procurement as well as usage of finance. For optimal procurement, different available sources of finance are identified and compared in terms of their costs and associated risks. The primary aim of financial management is to maximise shareholders’ wealth. The market price of a company’s shares are linked to the three basic financial decisions Financial decision-making is concerned with three broad decisions which are Investment Decision, Financing Decision, Dividend Decision.

(B) Short term investment decision is also known as 'capital budgeting decision"- This statement is false. Investment decision can be long-term or short-term. A long-term investment decision is also called a Capital Budgeting decision. Short-term investment decisions are also called working capital decisions.

(C) Short term investment decision is also known as "Working capital decision'- This statement is true. Short-term investment decisions are also called working capital decisions. These are concerned with the decisions about the levels of cash, inventory and receivables. These decisions affect the day-to-day working of a business. These affect the liquidity as well as profitability of a business. Efficient cash management, inventory management and receivables management are essential ingredients of sound working capital management.

(D) Investment decision includes raising funds from equity or debt- This statement is false. A firm’s resources are scarce in comparison to the uses to which they can be put. A firm, therefore, has to choose where to invest these resources, so that they are able to earn the highest possible return for their investors. The investment decision, therefore, relates to how the firm’s funds are invested in different assets. Financing decision is about the quantum of finance to be raised from various long-term sources.

(E) Investment decision includes short term and long term investment decision- This statement is true. A firm has to choose where to invest these resources, so that they are able to earn the highest possible return for their investors. The investment decision, therefore, relates to how the firm’s funds are invested in different assets. Investment decision can be long-term or short-term.