Framework

The three core finance decisions

The question it answers

When drawing up the annual financial plan, how should a CFO decide what to invest in, whether to fund it with debt or equity, and how much profit to pay out to shareholders?

Origin
Solomon, 1963; Pike, Neale and Linsley, 2018
Diagram type
Hub diagram
Level of analysis
Firm
Topics
Corporate finance
Stack of clay coins beside a rising glass bar chart, icon for finance

Diagram

The three core finance decisions

Shareholder value
Investment (capital budgeting)
Financing (debt–equity mix)
Payout (dividends, buybacks)
Working capital

Sources

References

Listed A–Z by author surname, Harvard style. A source with a DOI links to https://doi.org/…; one without links to its page or says plainly that it has no DOI.

  1. Pike, R., Neale, B. and Linsley, P. (2018) Corporate Finance and Investment, 9th edn. Harlow: Pearson.No DOISource page
  2. Solomon, E. (1963) The Theory of Financial Management. New York: Columbia University Press.No DOISource page