Financial Management

Checkpoint: Financial Management Goals

Fin/200

3/31/2011

Checkpoint: Financial Management Goals

A very important part of a corporation is Financial Management, because they have to understand all the financial aspects of the business and, the different kinds of goals within the company and this is also very important. The financial management has to make three very important decisions. The first one being, investment decisions where to invest funds and how much to invest. Next, a financing decision from where to raise funds and in what amount is to be raised, and lastly, dividend how much to pay dividend and how much to retain for future expansion. In order to make these decisions the management must have a clear understanding of the objective that is required to be achieved.

With these goals the main objective is to maximize the profit value of the firm’s shareholders, through achieving the highest possible value or profit for the firm. How are earnings valued in financial management? It is valued by the investors by analyzing the firm; the investor will also take into consideration the risk inherent in the firm’s operation, and the time pattern over which the firm’s earnings increase or decrease, the value and dependability of all reported earnings.

How do management decisions affect a stockholders wealth? Well if the management does not agree with the fact that they have to be sensitive to their stockholders concerns it could cause a problem. By incorporating policies that maximize values in the market, the firm could solicit for capital, provide employment, and offer benefits to its community. Plus by doing this they are making a big decision to help increase profit for the company and the stockholder’s, but if they do not find a way to satisfy the stockholder’s they will eventually pull out all of their shares from within the company.

References:

Bipin Das: http://www. rajputbrotherhood.com

Block, B.B.,...