Question

What are the primary types of decisions that managers make?

1) Capital budgeting decision - what to invest in
2) Capital structure decision - how to finance investments
3) Working capital or liquidity decision - day-to-day cash management

Answer 1

Managers in business make decisions related to capital budgeting, capital structure, and working capital or liquidity.

Step-by-step explanation:

The primary types of decisions that managers make in business include:

1. Capital budgeting decision: This involves deciding what investments to make, such as buying a machine or building a new plant, by considering the expected future profits and costs associated with the investment.
2. Capital structure decision: This refers to how a company finances its investments, whether through early-stage investors, reinvested profits, borrowing through banks or bonds, or selling stock.
3. Working capital or liquidity decision: This involves managing day-to-day cash flow, such as ensuring there is enough cash on hand to cover operating expenses and short-term liabilities.