Question:
Paraga company decided to raise 40% of funds through debentures. Which financial decision is it?
Paraga company decided to raise 40% of funds through debentures. Which financial decision is it?
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To distinguish between financial decisions, ask: Where to get money? (Financing), Where to put money? (Investment), and What to do with profit? (Dividend). Since debentures are a source of capital, it is always a Financing Decision.
Updated On: Mar 16, 2026
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Solution and Explanation
Concept: Financial Management involves three main decisions: • Investment Decision: Where to invest funds. • Financing Decision: How to raise funds (Debt vs. Equity). • Dividend Decision: How much profit to distribute.
Categorizing the source of capital.
Deciding the quantum of debentures (debt) versus equity relates to the capital structure, which is a core part of the Financing Decision.
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