The primary goal of financial managers is to maximize the wealth of the owners. Do you...
The primary goal of financial managers is to maximize the wealth of the owners. Do you fully agree or disagree with this statement and why?
Homework Answers
A financial entity fundamentally works for earning profits; though this is not the primary goal of the entity. The primary goal of financial entity is to maximize the wealth of the owners.
Wealth refers to the total market price of the shares invested by the shareholders. Wealth maximization can be defined as a concept of financial management which aims at maximization of total wealth of the owners or shareholders. It is a broader concept as compared to profit maximization as it takes into consideration all the factors like the cash flows, time value of money, goodwill of the entity and of course profit earning capacity of the firm.
So, the primary goal of financial managers is to maximize the wealth of the owners is a completely wholesome approach. This statement is completely agreeable.
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The primary goal of financial managers is to maximize the wealth
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