Which of the following is not a financing decision?

A

Should the firm borrow money from a bank or sell bonds?

B

Should the firm shut down an unprofitable factory?
 

C

Should the firm buy or lease a new machine that it is committed to acquiring?

D

Should the firm issue preferred stock or common stock?

Step 1

Financing decisions- It is concerned with the quantum of funds to be raised from the various long-term sources of finance such as equity shares, debentures, bank loans, etc. These decisions help in the formation of the capital structure of a company.

Step 2

A) Should the firm borrow money from a bank or sell bonds?- is a financing decision as it is a decision related to selecting the long term source of fund.

C) Should the firm buy or lease a new machine that it is committed to acquiring?- A lease-buy decision involves a choice between debt financing and lease financing making it a financing decision.

D) Should the firm issue preferred stock or common stock?- is a financing decision as it is a decision related to selecting the long term source of fund.

Step 3

B) Should the firm shut down an unprofitable factory?- is not a financing decision as it is related to an investing activity of the business and thus should come under the umbrella of investing decision.