a) What are the three fundamental decisions that financial managers are concerned when running a business? Elaborate on each concept.

b.    Discuss the importance of working capital management. 

The main objective of financial management is to maximize the wealth of the shareholders and in doing so financial managers are there to help the decision making process of businesses, since strictly speaking this alternatives that the business is taking into consideration is long term in nature, and includes a big outlay of cost is thus required and usually these are:

INVESTMENT DECISION - which includes commonly on the investing on long term-fixed asset to further explain here is a good reference for you: A financial decision which is concerned with how the firm's funds are invested in different assets is known as investment decision. Investment decision can be long-term or short-term

A long term investment decision is called capital budgeting decisions which involve huge amounts of long term investments and are irreversible except at a huge cost. Short-term investment decisions are called working capital decisions, which affect day to day working of a business. It includes the decisions about the levels of cash, inventory and receivables.

A bad capital budgeting decision normally has the capacity to severely damage the financial fortune of a business.

A bad working capital decision affects the liquidity and profitability of a business.

Factors Affecting Investment Decisions / Capital Budgeting Decisions:

1. Cash flows of the project- The series of cash receipts and payments over the life of an investment proposal should be considered and analyzed for selecting the best proposal.

2. Rate of return- The expected returns from each proposal and risk involved in them should be taken into account to select the best proposal.

3. Investment criteria involved- The various investment proposals are evaluated on the basis of capital budgeting techniques. Which involve calculation regarding investment amount, interest rate, cash flows, rate of return etc. It is to be considered which technique to use for evaluation of projects.

2. FINANCING DECISION - which commonly includes the capital structure of the entity

A financial decision which is concerned with the amount of finance to be raised from various long term sources of funds like, equity shares, preference shares, debentures, bank loans etc. Is called financing decision. In other words, it is a decision on the 'capital structure' of the company.

Capital Structure Owner's Fund + Borrowed Fund

Financial Risk: The risk of default on payment of periodical interest and repayment of capital on 'borrowed funds' is called financial risk.

Factors Affecting Financing Decision:

1. Cost- The cost of raising funds from different sources is different. The cost of equity is more than the cost of debts. The cheapest source should be selected prudently.

2. Risk- The risk associated with different sources is different. More risk is associated with borrowed funds as compared to owner's fund as interest is paid on it and it is also repaid after a fixed period of time or on expiry of its tenure.

3. Flotation cost- The cost involved in issuing securities such as broker's commission, underwriter's fees, expenses on prospectus etc. Is called flotation cost. Higher the flotation cost, less attractive is the source of finance.

4. Cash flow position of the business- In case the cash flow position of a company is good enough then it can easily use borrowed funds.

5. Control considerations- In case the existing shareholders want to retain the complete control of business then finance can be raised through borrowed funds but when they are ready for dilution of control over business, equity shares can be used for raising finance.

6. State of capital markets- During boom period, finance can easily be raised by issuing shares but during depression period, raising finance by means of debt is easy.

3. DIVINDEND DECISION-which commonly includes on the decision of the entity whether to declare dividends

A financial decision which is concerned with deciding how much of the profit earned by the company should be distributed among shareholders (dividend) and how much should be retained for the future contingencies (retained earnings) is called dividend decision.

Dividend refers to that part of the profit which is distributed to shareholders. The decision regarding dividend should be taken keeping in view the overall objective of maximizing shareholder s wealth.

Factors affecting Dividend Decision:

1. Earnings- Company having high and stable earning could declare high rate of dividends as dividends are paid out of current and past earnings.

2. Stability of dividends- Companies generally follow the policy of stable dividend. The dividend per share is not altered in case earning changes by small proportion or increase in earnings is temporary in nature.

3. Growth prospects- In case there are growth prospects for the company in the near future then, it will retain its earnings and thus, no or less dividend will be declared.

4. Cash flow positions- Dividends involve an outflow of cash and thus, availability of adequate cash is foremost requirement for declaration of dividends.

5. Preference of shareholders- While deciding about dividend the preference of shareholders is also taken into account. In case shareholders desire for dividend then company may go for declaring the same. In such case the amount of dividend depends upon the degree of expectations of shareholders.

6. Taxation policy- A company is required to pay tax on dividend declared by it. If tax on dividend is higher, company will prefer to pay less by way of dividends whereas if tax rates are lower, then more dividends can be declared by the company.

(source: https://www.economicsdiscussion.net/financial-management/types-of-financial-decisions-in-financial-management/31652)

Working capital management is important to different entities since the importance of WCM is to determine if an entity can actually operate on short-term or on normal basis and also it could give the decision makers the factor if the business is still solvent to be able to pay its short term obligation using its short term-asset to further explain here is a reference for you:

• The goal of working capital management is to maximize operational efficiency.
• Efficient working capital management helps maintain smooth operations and can also help to improve the company's earnings and profitability.
• Management of working capital includes inventory management and management of accounts receivables and accounts payables. 

Working capital is a daily necessity for businesses, as they require a regular amount of cash to make routine payments, cover unexpected costs, and purchase basic materials used in the production of goods.

Efficient working capital management helps maintain smooth operations and can also help to improve the company's earnings and profitability. Management of working capital includes inventory management and management of accounts receivables and accounts payables. The main objectives of working capital management include maintaining the working capital operating cycle and ensuring its ordered operation, minimizing the cost of capital spent on the working capital, and maximizing the return on current asset investments.  

Working capital is an easily understandable concept, as it is linked to an individual's cost of living and, therefore can be understood in a more personal way. Individuals need to collect the money that they are owed and maintain a certain amount on a daily basis to cover day-to-day expenses, bills, and other regular expenditures.

Working capital is a prevalent metric for the efficiency, liquidity and overall health of a company. It is a reflection of the results of various company activities, including revenue collection, debt management, inventory management and payments to suppliers. This is because it includes inventory, accounts payable and receivable, cash, portions of debt due within the period of a year and other short-term accounts.

The needs for working capital vary from industry to industry, and they can even vary among similar companies. This is due to several factors, including differences in collection and payment policies, the timing of asset purchases, the likelihood of a company writing off some of its past-due accounts receivable, and in some instances, capital-raising efforts a company is undertaking.