(A) Primary Objective:
1. Wealth Maximisation: The main objective of Financial management is to maximise shareholder’s wealth. Example- If Mr. X purchase 100 shares @ ` 100 of ABC Ltd. his wealth in company is ` 10,000/-. After some time, the market price of share increased to ` 130/-. Therefore, his wealth would be ` 13,000/-. His wealth increases by ` 3,000/-. If the market price of the share decreases to ` 90/- he loses his wealth by ` 1,000/- The market price of a company shares is linked to three basic financial decisions and shareholder’s wealth maximisation.
Wealth of shareholders= number of shares x market price per share.
(B) Other objectives:
1. To procure sufficient funds for the organisation: Adequate and regular supply of funds is to be maintained for smooth operations of the business.
2. To ensure effective utilisation of funds.
3. To ensure safety of funds : The chances of risk in investments should be minimum possible.
