Discussion: Corporate Financial Goals
The main goal of financial management is to maximize the wealth of the shareholders. In simple terms, this means the goal of any business is to use its resources efficiently while earning the highest profits possible. Another goal of financial management is to minimize risk. While financial managers want to earn maximum returns, they do not want to put their company in jeopardy.
Firms want to maximum returns at minimum risk, while attracting capital, providing stable employment for its people and benefitting the community. The way firms go about reaching these goals varies with each individual company.
1. Choose a publically traded company to research. You may use any company as long as it is publically traded and has not already been selected by a fellow classmate. To be sure that the company is publically traded, you can search for its ""ticker symbol"" on the Securities and Exchange Commission (SEC) website: https://www.sec.gov/edgar/searchedgar/companysearch.html (Links to an external site.). If you cannot find the ticker symbol on this site, then the company is not publically traded in the United States.
2. Identify the company in the title of your post. Be sure no one else has selected this company!
3. Give a short summary of the main business operations.
4. From the Annual Report (search for this under ""Investor Information"" on the Corporate website), record the following information for the most recent year and the past year:
• Total Revenue (Sales)
• Net Income
• Fixed Assets
• Total Liabilities
• Profit Margin
• Return on Equity (ROE)
• Earnings per share
• Consider what issues over the last two years have impacted the firm"'s financial position. Use this information to compare the report for this current year with the previous year(s). Generally speaking, did this company grow or decline from the previous year? Do you believe that managers have accomplished the goal of maximizing shareholder wealth? Explain why you think this is so.