Which of the following should be the primary goal pursued by the financial manager of a firm?
A)Maximizing net income (profits)
B)Maximizing the firm's net worth, or book value
C)Maximizing dividends paid to common stockholders
D)Minimizing variable operating expenses
E)Maximizing the market value of the firm's stock

Question

Quizplus · Accepted Answer

The primary goal pursued by the financial manager should be maximizing the market value of the firm's stock, which ultimately benefits shareholders. Maximizing net income or profits could be a short-term goal but not necessarily sustainable. Maximizing the firm's net worth or book value also doesn't necessarily reflect the true value of the company. Maximizing dividends paid to common stockholders could lead to underinvestment in growth opportunities, and minimizing variable operating expenses could hurt the company's long-term competitiveness.

Which of the Following Should Be the Primary Goal Pursued