What are the three types of financial management decisions? For each type of decision, give an example of a business transaction that would be relevant

Answer:

Three types of financial management decisions are capital budgeting decision, capital structure decision and Working capital management decision.

1. Example of Capital Budgeting decision:

When a company plans to take up a new project. Capital budgeting will help in identifying the projected free cash flows and also help in determining NPV of project an whether to go ahead with the project or scrap the idea.

2. Example of Capital structure decision:
When a company plans to issue debt or equity shares it comes under capital structure decision. Selling shares and clearing all debt is an example.

3. Example of Working capital management decision.
When a company discusses credit terms( like increasing payment days) with its supplier , this is part of working capital management