state two objective of financial management which help to maximize shareholders wealth
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Answer:
Financial Management: Objective # 1. Profit Maximisation:
Profit earning is the main aim of every economic activity. A business being an economic institution must earn profit to cover its costs and provide funds for growth. No business can survive without earning profit.
Financial Management: Objective # 2. Wealth Maximisation:
Wealth maximisation is the appropriate objective of an enterprise. Financial theory asserts that wealth maximisation is the single substitute for a stockholder’s utility. When the firm maximises the stockholder’s wealth, the individual stockholder can use this wealth to maximise his individual utility. It means that by maximising stockholder’s wealth the firm is operating consistently towards maximising stockholder’s utility.