Investment decision involves careful selection of assets in which funds are to be invested. Decisions relating to investment in fixed assets are known as capital budgeting decisions, whereas, those concerning investment in current assets are called working capital decisions.
A business needs to invest funds for setting up new business, for expansion and modernisation. Investment decision is taken after careful scrutiny of available alternatives in terms of costs involved and expected return.
These decisions are very crucial for any business. Earning capacity of the fixed assets of a firm, profitability and competitiveness, all are affected by the capital budgeting decisions. Moreover, these decisions normally involve huge amount of investment and are irreversible, except at a huge cost.
These decisions are crucial in nature  due to the following reasons:
(i) these are long-term decisions and can be reversed only at huge costs.
(ii)These generally involve commitment of huge funds.
(iii) These have a significant effect on the profitability and future of the business.
Thus, once these decisions are taken, it is impossible for a firm to undo these decisions and certainly, a bad capital budgeting decision normally has the capacity to severely damage the financial fortune of a business.  

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.

Financial management is concerned with optimum procurement as well as usage of finance.It aims at mobilisation of funds at a lower cost and deployment of these funds in the most profitable activities. Three broad decisions are:
(i) Investment decision It relates to how much funds are invested in different assets so that the firm is able to earn the highest possible returns on investment.Investment decisions can be long-term or short-term.
(ii) Financing decision It is concerned with the decisions of how much funds are to be raised from which long-term source, i.e. by means of shareholders' funds or borrowed funds. Shareholders' funds include share capital, reserves and surplus and retained earnings, whereas, borrowed funds include debentures, long-term loans and public deposits.
(iii)Dividend decision It relates to how much of the company's net profit is to be distributed to be 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.

It is concerned with optimal procurement as well as usage of funds.It aims to reduce the cost of funds, achieve keep the risks under control and achieve effective deployment of funds.Financial management plays a vital role in an organisation.

The main and foremost objective of financial management is to maximise the wealth of equity shareholders.The financial manager of a company takes this decision because the shareholders are the owners of the company.

Financial decisions taken will determine the manner in which the funds are invested.The return earned on investment will determine the value and price of the shares.The market price of the shares will increase if the benefit from the decision has exceeded its cost.

Secondly, the objective of increase in value of equity shares automatically fulfils many other objectives like increasing the profitability, maintaining liquidity, effective utilisation of funds and providing for growth of the company. 

I) Safety
ii) Identify the value which is being emphasized when company declares dividend as per the provisions of the Companies Act.

Capitalisation is a quantitative aspect of financial planning of an enterprise, while capital structure is concerned with qualitative aspect. Capitalisation refers to total amount of securities issued by a company while capital structure refers to the kind of securities and their compositions in total funds raised by a Co.

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. 

Fixed Capital : i) Capital invested in fixed assets such as building, machinery etc.
ii) Fixed assets have a long life and are not meant for resale.
iii) Basic objective is to provide infrastructure or production capacity for the manufacture of furnished goods.
Working capital :
i) It is invested in floating assets i.e. stock debtors.
ii) Floating assets are for short term and these can be converted into cash quickly.
iii) It’s aim is to meet day to day expenses of production process.

8 Negative impact of not paying dividend to share holder despite earning good profits.
1. It may adversely affect the share prices, stock market reacts adversely to non payment of dividend.
2. Chase holder will feel dissatisfied and this may lead to heavy seeling of shares which would in turn affect reputation of the firm.

The types decision is financing decision. Two vital factors to be kept in mind white taking such decision are :-
1. The cost of raising such funds.
2. Risk associated with deferent course – debt capital are generally considered more riskily. 

Electronic & computer industry are industries which require constant technological up gradation . The assets in such industries become obsolete very quickly and require constant replacement hence they require greates fixed capital investment. Furniture industry does not face danger of technological upgradation and hence they require less investment in fixed assets.