Financial decision refers to the decision related to financial matters of a business firm. It is concerned with the management of the flow of funds and involves decisions related to the acquisition and application of funds in long-term and short-term assets. Financial decisions are divided into three types: investment decisions, financing decisions, and dividend decisions. Financing decisions refer to the decisions that companies need to take regarding what proportion of equity and debt capital to have in their capital structure. The financing decision seeks to optimize the weighted average cost of capital (WACC) by looking at a company’s capital structure, specifically the cost of equity and the cost of debt. The objective of the financial decision is to balance an optimum capital structure. The financing decision is about the amount of finance to be raised from various long-term sources, which determines the various sources of finance, as well as it also provides the cost of each source of finance. The main sources of finance are shareholders’ funds and borrowed funds. Financing decisions involve analyzing the risk and cost associated with each source of finance. Effective financial decision-making requires a solid understanding of financial concepts.