Which one of the following best illustrates that the management of a firm is adhering to the goal of financial management?
A)increase in the amount of the quarterly dividend
B)decrease in the per unit production costs
C)increase in the number of shares outstanding
D)decrease in the net working capital
E)increase in the market value per share

Question

Quizplus · Accepted Answer

An increase in market value per share indicates that the management is maximizing shareholder wealth, which is the ultimate goal of financial management. Increasing dividends (A) and decreasing production costs (B) may also be beneficial, but they may not necessarily maximize shareholder wealth in the long run. Increasing the number of shares outstanding (C) can dilute ownership and reduce the value per share, while decreasing net working capital (D) can jeopardize the firm's liquidity and ability to meet short-term obligations.

Which One of the Following Best Illustrates That the Management