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Objectives of Financial Management
Financial management is a critical function in any organization. It involves
the planning, organizing, controlling, and monitoring of the financial
resources of the organization. The primary objective of financial
management is to maximize the shareholder's wealth by making the best
possible use of the organization's financial resources.
Key Objectives
The following are the key objectives of financial management:
Maximization of shareholder's wealth: This is the primary objective of financial management.
The management aims to increase the value of the shareholders' investment in the
organization by using its financial resources efficiently and effectively.
Profitability: Financial management aims to achieve a satisfactory level of profitability for the
organization. This is done by maximizing revenues, controlling costs, and optimizing the use
of resources.
Liquidity: Financial management ensures that the organization has sufficient liquidity to meet
its short-term obligations as they come due. This is done by managing the organization's
working capital effectively.
Solvency: Financial management aims to maintain the long-term solvency of the organization.
This is done by managing the organization's long-term debt and equity in such a way that it
can meet its long-term obligations.
Stability: Financial management aims to ensure the stability of the organization's financial
position. This is done by managing risk and ensuring that the organization has a stable
financial foundation.
Conclusion
Double-click or double-tap this to edit
Objectives of Financial Management
Financial management is a critical function in any organization. It involves
the planning, organizing, controlling, and monitoring of the financial
resources of the organization. The primary objective of financial
management is to maximize the shareholder's wealth by making the best
possible use of the organization's financial resources.
Key Objectives
The following are the key objectives of financial management:
Maximization of shareholder's wealth: This is the primary objective of financial management.
The management aims to increase the value of the shareholders' investment in the
organization by using its financial resources efficiently and effectively.
Profitability: Financial management aims to achieve a satisfactory level of profitability for the
organization. This is done by maximizing revenues, controlling costs, and optimizing the use
of resources.
Liquidity: Financial management ensures that the organization has sufficient liquidity to meet
its short-term obligations as they come due. This is done by managing the organization's
working capital effectively.
Solvency: Financial management aims to maintain the long-term solvency of the organization.
This is done by managing the organization's long-term debt and equity in such a way that it
can meet its long-term obligations.
Stability: Financial management aims to ensure the stability of the organization's financial
position. This is done by managing risk and ensuring that the organization has a stable
financial foundation.
Conclusion
