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Time left 0:38:48 The objectives of financial management are Select one: O a. Maximize profits and reduce the employees O b, Wealth maximization O c. Profit maximization O d. Profit maximization and wealth maximization O e. None of the options

Time left 0:38:48 The objectives of financial management are Select one: O a. Maximize profits and reduce the employees O b, Wealth maximization O c. Profit maximization O d. Profit maximization and wealth maximization O e. None of the options

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Time left 0:38:48 The objectives of financial management are Select one: O a. Maximize profits and reduce the employees O b, Wealth maximization O c. Profit maximization O d. Profit maximization and wealth maximization O e. None of the options Next page LC
Transcribed Image Text:Time left 0:38:48 The objectives of financial management are Select one: O a. Maximize profits and reduce the employees O b, Wealth maximization O c. Profit maximization O d. Profit maximization and wealth maximization O e. None of the options Next page LC
Expert Solution
Explanation:

Financial management has two main objectives. 

1) Profit maximisation in short run : because management of money is done to maximize the returns with available resources. 

2) wealth maximisation in long run : because profit doesn't make any sense if it is not sustainable. I.e. profits and surplus are invested in assets to generate wealth in long term. Apart from profit, share holders are concerned with wealth because it will increase the value of their shareholding.

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