purpose : objectives of financia

1. PURPOSE /OBJECTIVES OF
FINANCIAL MANAGEMENT
BY :- JASH SHAH(20BABBA188)
SIMON WADHWANIYA(20BABBA110)

2. Profit maximization:
This is the main objective of financial management. The finance
manager strives to achieve optimal profit in the short term and
long-term course of business. The finance manager shall try to
achieve as high as profits. The company makes a decent profit in the
long run if the finance manager makes the proper decisions using the
various methods and tools available

3. Wealth maximization:
It means shareholders’ value maximization. Wealth maximization means
earning maximum wealth for shareholders. So, the finance manager tries to
give maximum dividends to shareholders. The dividend declaration and
payout policy are decided by financial management. Dividend decisions
include a proper dividend policy regarding the distribution or retaining of
company profits. This is related to the performance of the company. Better the
performance, the higher is the market value of shares. In nutshell, the
finance manager tries to maximize shareholders’ value.

4. Proper mobilization:
Mobilization of finance is an important objective of
financial management. It means utilizing effectively the
sources of finance. The finance manager can manage various
sources of funds such as shares, and debentures, after
estimating the financial requirements, the finance manager
must decide about the sources of finance.

5. Proper utilization of
finance:
The finance manager must make optimum utilization
of finance. This can be done by using various
financial tools such as managing receivables, effective
payment policy in hand, and better inventory
management.

6. Maintaining proper
cash flow:
The financial manager shall ensure that there is a regular supply of
liquidity in the company monitoring closely all the cash inflows
and outflows reducing the instances of underflow and overflow of
cash. The finance manager is entrusted with the responsibility to
maintain an optimum level of liquidity. Healthy cash flow improves
the chances of survival and success of the company.

7. Conclusion:
◦Financial management is an essential discipline as it
guides the financial managers to make informed
financial decisions in their companies.
◦ Financial management is guided by several principles
that the managers should adhere to ensure that the
finances of a company are appropriately invested.