Objectives Of Financial Management
When it comes to apprehending with procurement, the use of funds financial management is the answer. It provides a frame work of selecting an appropriate course of action and deciding a practical commercial strategy. The main objectives of financial management is to use business funds to expand their business by maximizing their earnings and the value of the firm therefore they aim to maximize the economic welfare of the business owner’s. The objectives of financial management is divided into two parts; the wealth maximization and profit maximization.
The objectives financial management when it comes to profit maximization is gaining the proceeds. A company must make profits to cover its expenses, and allows the mother company to grow. Remember, no business can exists without generating the income. Profit maximization is a measure of the competence of a business enterprise will also serve as a guarantee against any risk that they have no guarantee to overcome the expenses.
The total profit allows the company to cope with risks, including competition from other companies, falling prices and bad public policy. But the main purpose of management financing when it comes to the maximization of profit is considered is the best among other objective of financial management. In addition, according to the economist that the time that the maximum benefits of recovery is the sole objective of all business establishments because it will lead to optimal allocation of resources. These actions, which increases corporate profits that actions that lower profits will be avoided.