There are three major financial decision which are made by the managers in the organisation and their effect on the firm value are as follows-

A. Investment decisions- These are the decision which are related to the investment into various Assets and long-term capital projects of the company and these will be focused upon maximizing the rate of return of the investors by generation of the futuristic cash flows and they will also try to lower the risk and they will also try to provide a higher degree of liquidity in the long run and hence they will enhance the value of the company if they are able to generate positive net present worth so it is related to capital budgeting decisions.

B. Financing decisions- financing decision is majorly related with the the raising of the capital and it is also related with discharging of various debt and repurchase of the shares from the market so it will be related to the capital structure of the company and it will always focus upon A optimum capital structure which maximizes rate of return of the company and enhance the overall value of the company.

C. Dividend decision- Dividend decisions are related to payment of dividend to the investors of the company and it is is analysed through whether the company is able to grow or not and if the company is able to grow, then it will be trying to reinvest the earnings back into the projects of the company to maximize the rate of return and it will be increasing the overall value of the company.