Skip to content

CA Intermediate · Financial Management and Strategic Management · Scope and Objectives of Financial Management

In a company, the finance manager of Kaveri Motors Ltd decides how much of the year's earnings to distribute to shareholders and how much to retain for expansion. Which finance function does this decision represent?

It is the dividend decision. Determining what share of profit is paid to shareholders as dividend and what share is retained for reinvestment falls under the dividend function, distinct from investment, financing or liquidity decisions.

  1. ADividend decisionCorrect
  2. BInvestment decision
  3. CFinancing decision
  4. DLiquidity decision

Explanation

Deciding the split between distributed and retained earnings is the dividend decision. Investment decisions concern asset selection, financing decisions concern the capital mix, and liquidity decisions concern working capital.

Did you get it right without looking?

One question tells you little. A timed set on Scope and Objectives of Financial Management shows your real accuracy, how long you take and where you lose marks.

Practise Scope and Objectives of Financial ManagementFree diagnostic mock

More Scope and Objectives of Financial Management questions