Goal and Scope of

Financial Management

Goals of Financial
Management
Profit Maximization:
Maximization of profits is very often considered
as the main objective of a business enterprise.
The objective of financial management is the
same as the objective of a company which is to
earn profit.
The shareholders, the owners of the business,
invest their funds in the business with the hope
of getting higher dividend on their investment.
Moreover, the profitability of the business is an
indicator of the sound health of the
organization, because, it safeguards the
economic interests of various social groups
which are directly or indirectly connected with
the company e.g. shareholders, creditors and
employees.

Goals of Financial
Management
Wealth Maximization:
The wealth maximization (also
known as value maximization or Net
Present Worth Maximization) is also
universally accepted criterion for
financial decision making. The value
of an asset should be viewed in
terms of benefits it can produce over
the cost of capital investment.
The value of a firm is represented by
the market price of the company's
stock. The market price ofa firm's
stock represents the assessment of
all market participants as to what the
value of the particular firm is.

Scope of Financial
Management
1. Procurement of Short term and
long term funds from financial
institutions.
2.

Mobilization of funds through

financial instruments such as
equity shares, preference shares,
debentures shares, bonds, notes
and so fourth.

3.

Compliance with legal and

regulatory provisions relating to
funds procurement, use and
distribution as well as coordination
of the finance function with
accounting function.