Financial Management Introduction

Question 1

What is the ultimate objective of the financial management function in a profit-oriented entity?

Answer 1

The ultimate objective of financial management is to maximize the value of the entity, usually as reflected by the market price for the firm’s stock.

Question 2

Identify three responsibilities of the financial management function of an entity.

Answer 2

1. Managing the capital and financial structure of the entity
2. Planning, allocating and controlling an entity’s financial resources
3. Identifying and managing financial risks faced by the entity