The five major factors affecting financing decisions are :
a) Cost of raising funds through various sources analysed and cheapest source is determined.
b) Risk-funds with least risk associated are selected.
c) Floatation Cost :- Higher floatation costs makes a source less attractive.
d) Cash Flow position of business :- When cast flow position is good debt financing may be more reliable.
e) Level of fixed operating costs : If fixed operating costs like rent insurance premium of a business are high then low debt financing must be resorted to.
f) Control Consideration : Equity leads to dilution of control. Hence firm facing takeover bide generally go for debt financing.
g) State of Capital Markets : If capital markets are in a state of boom raising finds through equity becomes easy.

With a debt component in the total capital, shareholders are likely to have the benefit of a higher rate of return on the share capital.
This is because debt/loan carry a fixed charge and the amount of interest paid is deductible from the earnings before tax payment.
(i) The benefit to the shareholders will be realised only if the average rate of return on total capital invested is more than the rate of interest payable on loan/debt.
For example, Let us consider two public companies X Ltd and Y Ltd.
The following calculation will show how trading on equity increases the return on equity shares
(i)

(ii)

Thus, it can be concluded that Y Ltd using fixed cost sources, i.e. debentures, earn a relatively high rate of return on equity capital.

Dividend decision relates to how much of the company's net profit is to be distributed to the shareholders and how much of it should be retained in the business for meeting the investment requirements.
This decision should be taken, keeping in view the overall objective of maximising shareholders, wealth.
Stability of Dividends
Generally, companies try to stabilise dividends per share.A steady dividend is given each year A change is only made if the company's  earning potential has gone up and not just earnings of the current year.
Shareholders' preference
While declaring dividends, management must keep in mind the preferences of the shareholders.Some shareholders in general desire that atleast a certain amount is paid as dividend.The companies should consider the preferences of such shareholders.
Legal constraints
Certain provisions of the companies act, place restrictions on payouts as dividend.Such provisions must be adhered to, while declaring the dividend.
Access to capital market
Large and reputed companies generally have easy access to the capital market and, therefore, may depend less on retained earnings to finance their growth.These companies tend to pay higher dividends than the smaller companies
Stability of Earnings
A company having higher and stable earnings can declare higher dividends than a company with lower and unstable earnings.
Growth Opportunities
Companies having good growth opportunities retain more money out of their earnings so as to finance the required investment.The dividend declared in growth companies is, therefore, our flow smaller than that in the non-growth companies. 
Cash Flow position
Dividend involves an outflow of cash.Availability of enough cash is necessary for payment or declaration of dividends.
Taxation of policy
If the tax on the dividends is higher, is is better to pay less by way of dividentd.But if the tax rates are lower, higher dividends may be declared. This is because as per the current taxation policy, a dividend distributions tax is levied on companies.However, dividends shareholders prefer dividends, as dividends are tax free in the hands of shareholders
Amount of Earnings
Dividends are paid out of current and past earnings.Thus, earnings is a  major determinant of dividend decision
Stock Market reaction
Generally, an increase in dividends has a positive impact on stock market, whereas, a decrease or no increase may have a negative impact on stock market.Thus, while deciding on dividends, this should be kept in mind.
Contractual Constraints
While granting loans to a company, sometimes, the lender may impose certain restrictions on the payments of dividends in future.The companies are required that the dividend payout does not violate the terms of the loan agreement  in this regard.

Yes,financial management is concerned with taking decisions regarding optimal procurement and utilisation of funds.For the effective procurement of funds,different available sources of finance are identified and compared in terms of cost and risk associated with them Procurement of funds is done for both long-term needs as well as short-term needs.

For long-term financing needs, the funds can be sourced through debt and equity.Short-term financing involves management of working capital.Now, the funds so procured have to be invested in a manner that the returns are higher than the cost of funds.The outflow of money is through purchase of fixed assets, current assets,working needs, distribution of dividends, etc.

Yes,
Reason:
i) Huge amount of funds are involved.
ii) Such decisions have long-term implications.
They are irreversible decisions.
There are associated cause with capital budgeting decisions 

The capital invested in fixed assets like land and buildings, plant and machinery, furnitures, etc, is known as fixed capital.Fixed capital is that portion of the total capital which is represented by fixed assets.It is known as 'block capital' because it is blocked up in fixed assets for the life of the company.
Fixed capital represents the permanent or long-term capital of an enterprise, Therefore,it is raised through long-term sources,like shares, debentures, long-term loans and retained earnings.
Factors determining fixed capital requirements are:
(i) Nature of business A manufacturing enterprise requires a large amount of fixed capital as compared to a trading or commercial concern.
(ii) Scale of operations A large scale enterprise generally requires greater than a small scale enterprise.e.g. a large scale steel enterprise like Tata Iron and Steel Company requires huge investment in fixed assets in comparison with a toy manufacturing unit.

Long-term investment decision is referred to as the capital budgeting decision.It relates to the investment in fixed assets e.g. buying a new machine.Before taking the final decision the finance manager makes a comparative study of various alternatives available in the market on the basis of their cost and profitability.
These decisions are very important as they affect the earnings of the business in the long-run.
Factors affecting long-term investment decision are::
(i) Cash flow of the project Cash flow of the project during the life if an investment affects the long-term investment decision.
Series of cash receipts and payments over the life of an investment has to be carefully analysed before taking a capital budgeting decision.
(ii)Rate of return of the project The most important criterion is the rate of return of the project.Investment yields return in future.Thus, calculation of returns is necessary to analyse the best project.
(iii)Risk involved With every investment proposal, there is some degree of risk involved. The company must try to calculate the risk involved in every proposal and select a proposal and select a proposal with moderate degree  of risk only

Financial management is concerned with the solution of three major issues relating to the financial operations of a firm corresponding to the three questions of investment, financing and dividend decision. In a financial context, it means the selection of best financing alternative or best investment alternative. The finance function therefore, is concerned with three broad decision which are as follows
(i) Investment Decision
The investment decision relates to how the firm’s funds are invested in different assets.
(ii) Financing Decision
This decision is about the quantum of finance to be raised from various long term sources and short term sources. It involves identification of various available sources of finance.
(iii) Dividend Decision
This decision relates to distribution of dividend. Dividend is that portion of profit which is distributed to shareholders the decision involved here is how much of the profit earned by company is to be distributed to the shareholders and how much of it should be retained in the business for meeting investment requirements.

Three possible situations of capitalization are :
(i) Fair and normal Capitalisation – Business employs correct amount of capital.
(ii) Once Capitalistaion – Business employs more capital than warranted.
(iii) Under Capitalisattion – Business employs less capital than warranted. 

The activity which involves preparation of financial blue print of an enterprises future operation is financial planning Advantages :-
1 It ensures availability of funds to a firm whenever it requires it.
2. To ensure that the firm does not raise resources unnecessarily or waste financial resources.