According to the statement of financial position model of the firm, corporate finance can be thought of as an analysis of three primary subject areas. Which of the following correctly lists these areas?
A) Capital structure, capital budgeting, security analysis.
B) Capital budgeting, capital structure, capital spending.
C) Capital budgeting, capital structure, net working capital.
D) Capital structure, net working capital, capital rationing.
E) Capital budgeting, capital spending, net working capital.

Question

Quizplus · Accepted Answer

Capital budgeting involves decisions on investment in projects that yield returns over a period longer than one year. Capital structure pertains to the firm's financing decisions—how it decides between raising funds through equity or debt. Net working capital focuses on short-term financial management, dealing with assets and liabilities that are turned over within a year.

According to the Statement of Financial Position Model of the Firm