Question

Write three objectives of Financial Management.

Hint:

Always balance short-term profitability with long-term wealth maximization for sustainable financial management.

Answer 1

Step 1: Understanding the objectives of financial management.
The key objectives of financial management are:
1. Profit Maximization: The primary goal of financial management is to maximize the profitability of the business. This involves making decisions that increase the company's profitability while ensuring the efficient use of resources.
2. Wealth Maximization: Financial management aims to maximize the wealth of shareholders by increasing the value of the business in the long term. This can be achieved through strategic investments and value-creating decisions.
3. Ensuring Liquidity: Financial management ensures that the business has sufficient liquidity to meet its short-term obligations, enabling smooth operations without running into cash flow problems.

Step 2: Conclusion.
These objectives guide financial managers in making decisions that contribute to the financial health and growth of the organization.