describe the goal of financial management

Expert Solution

The goal of financial management is "maximization of shareholders' wealth".

Such maximization occurs when, any decision taken by the mangement results in increasing the shareholders' wealth to the maximum extent possible. Further, wealth is generated when the PV of cash inflows exceed the PV of cash outflows related to any decision; the difference termed as NPV [net present value].

Thus, increase in wealth occurs when present value of cash inflows > Cost.

Achievement of the goal of wealth [NPV] maximization is the focus when the three branches of decision making, namely,

*investing decisions,

*financing decisions and

*payout decisions,

are taken.

When investment decisions are taken the goal is achieved by going for the investments with higher positive NPV; when financing decisions are taken the goal is achieved by minimizing overall cost of capital which, in turn will increase and NPV and when dividend/repurchase decisions are taken, the availability of projects promising the minimum required return are considered.

jeff jeffy answered 2 years ago

Describe the goal of financial resource management.

The overriding goal of financial management is to

The overriding goal of financial management is to Maximize shareholders' wealth Maximize profit Maximize sales Maximize operational efficiency

Describe the goal of disease management.

A) What is the fundamental goal of financial management?

A) What is the fundamental goal of financial management? B) Explain agency theory and agency problems between stockholders and managers AND solutions. Also explain the potential conflict between stockholders and bondholders.

The goal of international financial management is to maximize shareholders' wealth, same as that of financial management.

The goal of international financial management is to maximize shareholders' wealth, same as that of financial management. Then what are the four factors/topics that make international finance separate or special?

Describe the goal of financial management? Identify the three main areas of concern in corporate finance?...

Describe the goal of financial management? Identify the three main areas of concern in corporate finance? Explain the advantages and disadvantages of conducting business as a corporation?

The primary goal of financial management is creating value by _______

The primary goal of financial management is creating value by _______ A. making investments that are worth more than they cost B. issuing bonds that receive investment-grade ratings C. making investments that pay off sooner rather than later D. taking as little risk as possible

There are many objectives of financial management in corporate. What is the main goal of financial management in the corporate?

It is often argued that the goal of financial management is to maximize the value of...

It is often argued that the goal of financial management is to maximize the value of the firm for its owners. Prompt: Do you agree that this is the proper goal? Why or why not? Read Goizueta (1997) (Links to an external site.). Here, Goizueta defends Coca-Cola’s stated mission: “to create value over time for the owners of our business.” Prompt: Do you find his arguments persuasive? Why or why not? minimum 300 words

What is the primary goal of financial management for a sole proprietorship?

What is the primary goal of financial management for a sole proprietorship? Maximize the market value of the equity Maximize net income given the current resources of the firm Minimize the tax impact on the proprietor Decrease long-term debt to reduce the risk to the owner Minimize the reliance on fixed costs

Question