The goal of financial management is to increase the: a. dividends paid per share. b. future value of the firm's total equity. c. number of shares outstanding. d. book value of equity.
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Bonus Knowledge
The primary aim of financial management centers around maximizing the wealth of shareholders, which typically translates to increasing the future value of the firm's total equity. This is accomplished by making strategic investment decisions, maintaining optimal capital structures, and ensuring effective cash flow management. When total equity rises, shareholders benefit both directly and indirectly through dividends and overall company growth. In practice, this means that financial managers need to focus on making informed decisions that align with long-term growth and profitability, rather than short-term gains. For instance, investing in innovation or market expansion can fuel future earnings, ultimately leading to enhanced shareholder value. So, the next time you're juggling numbers, think about how your choices impact the company's overall worth!