A firm is facing difficulties managing the expenses of day-to-day operations. Which decision has the company ignored here?

Option 1 -> Dividend decision relates to profit distribution to shareholders, not day-to-day operational expense management.

Option 2 -> Investment decision focuses on long-term capital allocation and asset acquisition, not managing daily operational expenses.

Option 3 -> Working Capital decision involves managing short-term assets and liabilities (cash, inventory, receivables, payables) essential for day-to-day operations.

Option 4 -> Solvency decision concerns long-term financial stability and meeting long-term obligations, not daily operational expenses.

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Hence, Option 3: Working Capital decision -> When a firm struggles with day-to-day operational expenses, it indicates poor working capital management. Working capital decisions ensure adequate liquidity to meet short-term obligations, manage cash flows, and fund daily operations efficiently. Ignoring this leads to operational difficulties. -> correct