Question

State the objectives of financial management.

Answer 1

The financial management is generally concerned with procurement, allocation and control of financial resources of a concern. The objectives can be-

• To ensure regular and adequate supply of funds to the concern.
  
• To ensure adequate returns to the shareholders which will depend upon the earning capacity, market price of the share, expectations of the shareholders.
  
• To ensure optimum funds utilization. Once the funds are procured, they should be utilized in maximum possible way at least cost.
  
• To ensure safety on investment, i.e, funds should be invested in safe ventures so that adequate rate of return can be achieved.
  
• To plan a sound capital structure-There should be sound and fair composition of capital so that a balance is maintained between debt and equity capital.