Name the primary objective of Financial Management.
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Maximising Share holder’s Wealth
Option (1) Maximising profits — Incorrect. Profit maximisation is not the primary aim of financial management. It ignores risk and the timing of returns.
Option (2) Maximising Sales — Incorrect. Sales are not the primary aim. More sales do not always mean more value for the owners.
Option (3) Maximising Cost — Incorrect. Cost is something to be reduced, not maximised.
Option (4) Maximising Share holder’s Wealth — Correct. The primary aim of financial management is to maximise the shareholders’ wealth. This is called the wealth-maximisation concept.
NCERT (2026-27 Edition): “Objectives The primary aim of financial management is to maximise shareholders’ wealth, which is referred to as the wealth-maximisation concept. The market price of a company’s shares is linked to the three basic financial decisions which you will study a little later. …” |