The decisions made by ﬁnancial managers should all be ones which increase the:
A) Size of the ﬁrm.
B) Growth rate of the ﬁrm.
C) Marketability of the managers.
D) Market value of the existing owners' equity.
E) Financial distress of the ﬁrm.

Question

Quizplus · Accepted Answer

The primary goal for financial managers should be to increase the market value of the existing owners' equity. This means maximizing shareholder wealth by increasing the stock price and paying out higher dividends. While growth is important, it is not the only objective; financial managers must also consider profitability, risk, and financial stability. The other choices, such as increasing the size of the firm or marketability of the managers, may be beneficial but are not directly tied to increasing shareholder value. Financial distress of the firm is obviously a negative outcome and not a goal.

The Decisions Made by ﬁNancial Managers Should All Be Ones