Early in the class, we identified the primary goal of a financial manager as maximizing shareholder...

Early in the class, we identified the primary goal of a financial manager as maximizing shareholder wealth. Having now completed the class, explain whether or not you feel this is the appropriate goal for a company. Provide a minimum of 2 reasons to support your answer.

Expert Solution

The primary goal of the firm and its financial manager is to maximize shareholder’s wealth because

1) It is the shareholders who are the founder of the company and its business and they have initialized each and everything in the company to make money. So, they have full right on the profits made by company.

2) The shareholders have been first investor/owner/put in their money to mobilize the cash generation process of the company. So, the result of the all financial activities (ie. profits) taken up by Finance Manager, should belongs to the shareholders only to maximize their wealth.

jeff jeffy answered 2 years ago

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