Objectives of Financial Management

Objectives of Financial Management:

The Objectives of financial management fix the target of finance manager. Beneath the scope of financial management, he has to attain various objective of financial management.

We can build the list of such objectives:

A. To diminish the Misuse of Funds:

It is the objective of financial management to diminish the misuse of funds. Let’s take my own instance. I hate misusing of my tough earned money. Last month, I have purchased DVD writer for beginning business of CD and DVD of educational tutorials. However, after spending one month, DVD writer is being employed for production or business purposes; I think this is waste of my fund. When I deposited it in bank, I can earn interest on saving account on regular basis. Akin to me, company as well misuses his funds in bad projects. We must learn from objective of financial management and diminish the misuse of even one rupee.

B. To maximize the gain in Long Run:

When a businessman invests his wealth and wants to earn high gain, it means, it is taking high risk according to risk theory of the financial management. This is not objective of financial management, however to maximize the gain in long run is real purpose of financial management.

C. To maximize the Wealth of Company:

An investor just purchases shares, when he hopes that he will earn high gain on it, or else, he can deposit his money in saving account of bank. Therefore, it is the objective of financial management to maximize the value of share. This can be possible by following manner.

a) To raise Dividend per share
b) To raise earnings per share
c) To examine the value of share in market

D. To accomplish the Social Responsibility:

Company utilizes the natural resources and earns funds and money. Assume that ABC Company started a plant in a place and use water, land and machines; it earned 10 million dollars from that plant. According to my view, ABC Company takes his all natural resources from society in type of land, water, metal and minerals. God has made such things for whole society not a specific ABC company. When ABC Company has used such resources, then it is the duty of ABC Company to fulfill his responsibility in the direction of society. This is the chief objective of financial management. Company’s reputation can be computed with how many staff is working in it. What facilities are offered by company to his employees? If company only exhibits his balance sheet of dead plants, machinery and other assets although there is not provision of any social movement or donation, which company will not get any goodwill. A few companies are being operated on the basis of public deposits rather than share capital. Why? And response is security and that company can provide only the security who wants to advantage of society similar to a social worker.

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