What should be the primary goal of financial management?
A) Increased earnings
B) Maximizing cash flow
C) Maximizing shareholder wealth
D) Minimizing risk of the firm

Question

Quizplus · Accepted Answer

The primary goal of financial management should be to maximize shareholder wealth. Maximizing shareholder wealth is accomplished by maximizing the value of the business through the generation of profits, increasing the value of stocks, and providing dividends to shareholders. This goal aligns the interests of the firm's owners with those who manage it. Increasing earnings, maximizing cash flow, and minimizing risk are all important objectives of financial management, but they are secondary to the overarching goal of maximizing shareholder wealth.

What Should Be the Primary Goal of Financial Management