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Financial MGNT
Financial MGNT
1. Valuation approach – this is not meant to undermine the importance of profit. Let us emphasize
profit maximazation is very important. This means that the main gaol of financial management
is to maximize not profit alone but the maximization of overall value of the firm.
2. Maximization of Shareholders Wealth – this sis considered to be expansive goal of the firm.
However this is not an easy task. Managers have no direct control of the market value of the
forms stocks. The market value of stocks may not necessarily be high even the company proves
to be profitable or stable.
3. Social responsibility – is an issue that needs to be considered. The need of the firm for wealth
maximization and the need of the firm to be socially responsible must be equal. The firm by
using measures would maximize wealth and company market value would be able to draw more
capital, help diminish unemployment and giver services to the community. Companies belonging
to these industries must do a concerted effort in being socially responsible. Concerted because if
only company opts to be socially responsible that “ martyr” would not survive.