Question

explain 3 major goals of financial management

Answer 1

Major goals of Financial Management :

1) Shareholder wealth creation : The ultimate goal of the Financial Management is to create wealth for the owner of the company. ie to utilize the resources in the maximum optimum way that leads to profit maximisationa and shareholder wealth creation. All the activities are planned and executed to achieve this goal.

2 ) Risk Management : Financial Managers task is to identify risks and then find ways to mitigate the same or eliminate them altogether. Financia managers has to work to reduce the risk and act smartly in a risky situation to safeguard the interest of the owners as well as the assets of the organization.

3) Optimum utilisation of the resources : Efficient resource utilization is one of the primary goal of Financial Management. Internal controls are required to safeguard the assets of teh company and to utilise the aseets of teh company in most optimum manner. Transparency and openness are two of the charteristics that needs to incorporated to enhance the internal controls. The auditors and executive management plays a important role in the same.