1.

Explain any five objectives of financial management.

Answer»

1. Profit maximization: profit can be maximized with proper utilization of organization's resources. The company should earn sufficient profit to reach its expenses, expansion & modification. 

2. Wealth maximization: It means the maximization of the market value of shares. The market value of shares is related to three financial decision, viz., investment decision, financial decision, & Dividend decision. 

3. Proper estimation of total requirement: It is very important to know the financial requirement to start & run the business. Estimating of financial requirements is done after considering factors such as a scale of operation, technology, manpower requirements etc. 

4. Obtaining funds at minimum cost: The required fund can be mobilized through many sources such as shares, debentures, Bank loan etc. The finance manager must decide about difference & the balance between owned finance & borrowed finance. He must obtain the funds at a minimum cost.

5. Proper utilization of finance: Finance must invest in profitable projects and care should be taken to ensure that finance is not wasted due to investment in unprofitable projects, blocking of finance in inventories & long period of credit.



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