ACCA SBL Syllabus G. Finance In Planning And Decision-Making - Determine The Overall Investment Requirements Of The Organisation - Notes ^{1 / 11}

Financing Requirements

There are three types of decision relevant to the financial requirements of the business:

1. Investment Decisions

   Identify opportunities and decide which ones should be invested in

2. Financing Decision 

   How should the organisation be financed in the short and long term?

3. Dividend Decision 

   How much to pay out as dividends to shareholders

These are interrelated...

How much you invest leads to finance needed and hence how much dividends to give away

So cashflow forecasts are needed and things like sensitivity analysis in forecasts to see how finances would change as variables such as demand, inflation etc change