Skip to content

CS Executive · Corporate Accounting and Financial Management · Introduction to Financial Management

Which of the following is an example of a financing decision rather than an investment decision?

Deciding the debt and equity mix for funding a new plant is a financing decision because it concerns the sources of capital. Choosing machines, acquiring a business or setting inventory levels involve deploying funds in assets, which are investment decisions.

  1. ADeciding the proportion of debt and equity to raise funds for a new plantCorrect
  2. BChoosing between two machines for purchase
  3. CDeciding to acquire a competitor's business
  4. DSelecting the level of inventory to carry

Explanation

A financing decision concerns the sources and mix of funds, such as debt versus equity. Selecting a machine, acquiring a business and setting inventory levels all concern how funds are deployed in assets, so they are investment decisions (including working capital decisions).

Did you get it right without looking?

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

More Introduction to Financial Management questions