Financial Management Goals
Financial Management Goals
Cleveland Sharpe
FIN 200
May 17, 2013
Shek Kablan
Financial Management Goals 1. Describe the goals of financial management. “The goal of a financial manager is to earn the highest possible profit for the firm or company. When using this criterion, each decision would be evaluated on the basis of its overall contribution to the firm or company’s earning. This approach could lead to some serious drawbacks to the profit maximization as the primary goal of the firm or company” (Block, Hirt, & Danielsen, p. 11, 2009). I think an experienced financial manager is the life of the company because he has to work for the company and the investors. If the financial manager isn’t earning the highest possible profit for the firm or company then the firm could potential go under or even bankrupt leading to the end of the company. “The broad goal of the firm can be brought into focus if we say the financial manager should attempt to maximize the wealth of the firm’s shareholders through achieving the highest possible value for the firm” (Block, Hirt, & Danielsen, p. 12, 2009). 2. How are earnings valued? “Some of the factors which and investor will analyze the firm would be to consider the risk inherent in the firm’s operation, the pattern over which the firm’s earnings increase or decrease, the quality and reliability of a reported earnings” (Block, Hirt, & Danielsen, 2009, p. 12). If an investor thinks the firm would be a high risk then he probably wouldn’t want to invest any money with this firm because of the chance of he or his company may lose money. 3. How can shareholder wealth be maximized? “In order to maximize a shareholders wealth the financial manager should try and receive the highest possible value for the firm. This is not a simple task because the
Cleveland Sharpe
FIN 200
May 17, 2013
Shek Kablan
Financial Management Goals 1. Describe the goals of financial management. “The goal of a financial manager is to earn the highest possible profit for the firm or company. When using this criterion, each decision would be evaluated on the basis of its overall contribution to the firm or company’s earning. This approach could lead to some serious drawbacks to the profit maximization as the primary goal of the firm or company” (Block, Hirt, & Danielsen, p. 11, 2009). I think an experienced financial manager is the life of the company because he has to work for the company and the investors. If the financial manager isn’t earning the highest possible profit for the firm or company then the firm could potential go under or even bankrupt leading to the end of the company. “The broad goal of the firm can be brought into focus if we say the financial manager should attempt to maximize the wealth of the firm’s shareholders through achieving the highest possible value for the firm” (Block, Hirt, & Danielsen, p. 12, 2009). 2. How are earnings valued? “Some of the factors which and investor will analyze the firm would be to consider the risk inherent in the firm’s operation, the pattern over which the firm’s earnings increase or decrease, the quality and reliability of a reported earnings” (Block, Hirt, & Danielsen, 2009, p. 12). If an investor thinks the firm would be a high risk then he probably wouldn’t want to invest any money with this firm because of the chance of he or his company may lose money. 3. How can shareholder wealth be maximized? “In order to maximize a shareholders wealth the financial manager should try and receive the highest possible value for the firm. This is not a simple task because the