Which of the following statements best describes corporate goals? a. The proper goal of the financial...

Which of the following statements best describes corporate goals?

	a.	The proper goal of the financial manager should be to attempt to maximize the firm’s expected cash flows, because this will add the most to the wealth of the individual shareholders.
	b.	The riskiness inherent in a firm’s earnings per share (EPS) depends on the characteristics of the projects the firm selects, and thus on the firm’s assets. However, EPS is not affected by the manner in which those assets are financed.
	c.	Potential agency problems can arise between shareholders and managers, because managers hired as agents to act on behalf of the owners may instead make decisions favourable to themselves rather than the shareholders.
	d.	The financial manager should seek that combination of assets, liabilities, and capital that will generate the largest expected projected after-tax income over the relevant time horizon, generally the coming year.

Solutions

Expert Solution

The primary goal of a finance manager is to increase the shareholders wealth. This can be achieved through maximising the expected future cashflows

Option A is correct

jeff jeffy answered 2 years ago

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