What Is The Long Term Objective Of Financial Management?

What is the primary goal of financial management Mcq?

Answer & Solution Solution: The primary goal of the financial management is to maximize the wealth of owners.

All businesses aim to maximize their profits, minimize their expenses and maximize their market share..

What are the objectives of the financial department?

The goals for a finance department can include strategic budgeting, cost containment, cash flow management, debt servicing, tax planning and accurate record keeping.Strategic Budgeting and Projecting. … Cost Containment and Purchasing Management. … Cash Flow Management. … Debt Service and Credit Use. … Proactive Tax Planning.More items…

What are the functions of financial management?

Financial Management FunctionsFinancial Planning and Forecasting. It is the financial manager’s responsibility to plan and estimate the business’s financial needs. … Determination of capital composition. … Fund Investment. … Maintain Proper Liquidity. … Disposal of Surplus. … Financial Controls.

What are the three types of financial management?

The three types of financial management decisions are capital budgeting, capital structure, and working capital management.

What is minimum working capital?

Current working capital shall be defined as all Current Assets, less all Current Liabilities. …

What is the concept of financial management?

Financial management may be defined as the area or function in an organization which is concerned with profitability, expenses, cash and credit, so that the “organization may have the means to carry out its objective as satisfactorily as possible;” the latter often defined as maximizing the value of the firm for …

What are the goals and objectives of financial management?

The objectives of financial management are given below:Profit maximization. … Wealth maximization. … Proper estimation of total financial requirements. … Proper mobilization. … Proper utilization of finance. … Maintaining proper cash flow. … Survival of company. … Creating reserves.More items…•

What is permanent working capital?

Permanent working capital refers to the minimum amount of working capital i.e. the amount of current assets over current liabilities which is needed to conduct a business even during the dullest period.

What are the factors affecting working capital?

Factors Affecting the Working Capital:Length of Operating Cycle: The amount of working capital directly depends upon the length of operating cycle. … Nature of Business: … Scale of Operation: … Business Cycle Fluctuation: … Seasonal Factors: … Technology and Production Cycle: … Credit Allowed: … Credit Avail:More items…

What is permanent and variable working capital?

Permanent or fixed, working capital is the minimum level of current assets. It is permanent in the same away as the firm’s fixed assets. … Fluctuating or Variable working capital is the extra working capital needed to support the changing production and sales activities of the firm.

What is the finance function?

Definition of Finance Functions. … In business, the finance function involves the acquiring and utilization of funds necessary for efficient operations. Finance is the lifeblood of business without it things wouldn’t run smoothly. It is the source to run any organization, it provides the money, it acquires the money.

What is the most appropriate goal of the firm?

Shareholder wealth maximizationShareholder wealth maximization is the most appropriate goal of the firm. Wealth maximization is the concept of increasing the value of a business in order to increase the value of the shares held by stockholders.

What is the long run objective of financial management?

The long-run objective of financial management is to: maximize earnings per share.

What is the main purpose of financial management?

The primary objectives of financial management are: Attempting to reduce the cost of finance. Ensuring sufficient availability of funds. Also, dealing with the planning, organizing, and controlling of financial activities like the procurement and utilization of funds.

What is the only feasible purpose of financial management?

The only feasible purpose of financial management is wealth maximization. Explanation: Financial management is the method of managing the finances of a company through effective planning, control, organization and keeping a track of all forms of financial spending.

What are the principles of financial management?

10 Basic Principles of Financial ManagementOrganize Your Finances. Organizing your finances is the first step to creating wealth. … Spend Less Than You Earn. … Put Your Money to Work. … Limit Debt to Income-Producing Assets. … Continuously Educate Yourself. … Understand Risk. … Diversification Is Not Just for Investments. … Maximize Your Employment Benefits.More items…•