Financial management involves making efficient investment, financing, dividend, and liquidity decisions to maximize shareholder value and balance risk and return. There are four main financial decisions: (1) investment decisions relate to selecting long and short-term assets; (2) financing decisions concern the capital structure and leverage; (3) dividend decisions involve distributing profits to shareholders or retaining earnings; (4) liquidity decisions manage current assets to prevent insolvency. Financial managers aim to take decisions that provide sufficient return for the level of risk.