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18.Key aspects of financial decision-making

The key aspects of financial decision-making relate to investment, financing and dividends. Investments
must be financed in some way however there are always financing alternatives that can be considered.

For example, it is possible to raise finance from selling new shares, borrowing from banks or taking
credit from suppliers:

A key financing decision is whether profits earned by the business should be retained rather than
distributed to shareholders via dividends.

If dividends are too high, the business may be starved of funding to reinvest in growing revenues and
profits further.