Investment Vis-A-Vis Financing Decisions

Abstract

The study of Finance is based on two "canons" whose importance and utility can hardly be over emphasized while dealing with Corporate Finance decision making process. The investment and financing decisions are interlinked and hence, any attempt at treating them in isolation may lead to wrong decisions. Moreover, while adopting financing strategies, due care needs to be taken in order to ensure that such strategies would not culminate into asset liability mismatch issues at some later date. Faltering on any of these so called "canons" of finance would invariably lead to questionable finance decisions which would adversely affect performance of companies. The enclosed case study (along with the exhibits and list of review questions) attempts to provide a practical insight to the impact and relevance of these "canons" in the financial decision making process.