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 of financial management is to maximize the market value of the existing owners' equity. Therefore, all financial decisions made by the managers should be aimed at increasing the value of the firm, which will ultimately benefit the existing shareholders. Increasing the size and growth rate of the firm may not necessarily increase the market value of the existing owners' equity, whereas increasing the marketability of the managers and causing financial distress for the firm are not desirable outcomes.

The Decisions Made by Financial Managers Should All Be Ones