BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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generate the maximum net profit
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generate the maximum retained earnings
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generate the maximum wealth for its shareholders
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generate maximum funds for the firm at the least cost
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Detailed explanation-1: -Wealth maximization (shareholders’ value maximization) is also a main objective of financial management. Wealth maximization means to earn maximum wealth for the shareholders. So, the finance manager tries to give maximum dividend to the shareholders. He also tries to increase the market value of the shares.
Detailed explanation-2: -The paramount objective of the financial management is maximising the shareholders’ wealth. That is, the basic objective of financial management for a company is to opt for those financial decisions that prove gainful from the point of view of the shareholders.
Detailed explanation-3: -The goal of financial management is to maximize shareholder wealth. For public companies this is the stock price, and for private companies this is the market value of the owners’ equity.
Detailed explanation-4: -Profit maximisation is a process business firms undergo to ensure the best output and price levels are achieved in order to maximise its returns. Influential factors such as sale price, production cost and output levels are adjusted by the firm as a way of realising its profit goals.