The primary aim of financial management is:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Wealth maximization
Option (1) Profit maximisation — Incorrect. Earning profit is important. But it is not the primary aim of financial management.
Option (2) Sales maximization — Incorrect. Higher sales is a goal of marketing, not the main aim of financial management.
Option (3) Production maximization — Incorrect. More production is a goal of the production department. It is not the aim of financial management.
Option (4) Wealth maximization — Correct. The primary aim of financial management is to maximise shareholders’ wealth. This means raising the market value of the equity shares. A decision is taken only when its benefit is more than its cost, so it adds value for the shareholders.
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. This is because a company funds belong to the shareholders and the manner in which they are invested and the return earned by them determines their market value and price. It means maximisation of the market value of equity shares. The market price of equity share increases, if the benefit from a decision exceeds the cost involved. …” |
Note: The same/similar question has been asked in different years by NTA as per the details given below:
| 2026 | 2025 | 2024 | 2023 | 2022 |
| 29-05 S1 24-05 S1 11-05 S2 | 30-05 S1 15-05 S1 | – | 29-05 S3 | – |