Question

Financing decision is related to

• A. Capital structure
• B. Financial structure
• C. Capitalisation
• D. Financial planning

Hint:

The capital structure is the primary focus of financing decisions, involving how a company finances its assets through a mix of debt and equity.

Answer 1

The Correct Option is A

Step 1: Understanding the financing decision.
The financing decision refers to the decision regarding the sourcing of funds for the business, which is typically linked to the capital structure of the organization. Capital structure is the mix of debt and equity used to finance the company’s assets.
Step 2: Analyzing the options.
(A) Capital structure: Correct. Financing decisions are part of capital structure decisions, which involve determining the proportion of debt and equity.
(B) Financial structure: This is related but slightly different from capital structure, as it also includes other sources of financing.
(C) Capitalisation: Incorrect. Capitalisation refers to the total value of a company’s outstanding shares and does not directly relate to financing decisions.
(D) Financial planning: Incorrect. Financial planning refers to budgeting and forecasting, not directly to the financing decision.
Step 3: Conclusion.
The correct answer is (A) Capital structure, as it directly relates to the financing decision of a business.