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Dear Tutor
i studied frm opentuition and kaplan but of many problems, the basic one i encountered is that kaplan says THE THREE KEY FIN.MANAGEMENT DECISIONS ARE INVESTMENT DECISIONS FINANCING DECISIONS AND DIVIDEND DECISIONS whereas you guys say the third one is WORKING CAPITAL MANAGEMENT ?? Can you kindly elaborate?
Kaplan is not wrong, but the decisions about dividends are really related to financing decisions (whether to pay a big dividend, or to retain earnings to finance expansion).
Working capital management is relevant (and almost always asked in the exam) because if (for example) receivables are not controlled properly and allowed to take too long to pay, then working capital is higher than it need be which means either more borrowing is needed, or alternatively funds are tied up in working capital which could otherwise be used to buy new machines etc. and expand the business.
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