GOALS OF FINANCIAL MANAGEMENT

Question 1

One of the primary goals of financial management is to maximize profits by increasing revenues and minimizing expenses.

Answer 1

Profit Maximization

Question 2

Another important goal of financial management is to maximize the wealth of the shareholders. This involves increasing the share price and paying dividends to shareholders.

Answer 2

Wealth Maximization

Question 3

Financial managers also need to manage financial risks by identifying and mitigating potential financial risks to the organization.

Answer 3

Risk Management

Question 4

Financial managers must allocate capital effectively to ensure that it is used efficiently and that the organization can achieve its strategic goals.

Answer 4

Effective Capital Allocation

Question 5

Financial managers must ensure that the organization’s financial operations are efficient and that resources are used effectively to minimize costs.

Answer 5

Efficient Operations

Question 6

Financial managers must ensure that the organization is financially sustainable in the long term by making decisions that balance short-term profitability with long-term growth and stability.

Answer 6

Long-Term Sustainability