ACCA Strategic Professional · Advanced Financial Management · Strategic business and financial planning for multinational organisations
A multinational's finance director is asked to set a long-term financial strategy. Which of the following is the primary objective that ACCA AFM treats as the foundation for financial strategy decisions in a listed company?
The foundation objective is maximising shareholder wealth, constrained by the interests of other stakeholders, law and ethics. Profit, market share or minimal debt may support this aim, but none replaces it as the primary basis for financial strategy in a listed multinational.
- AMaximising the company's accounting profit in each reporting period
- BMaximising the wealth of shareholders, subject to constraints from other stakeholdersCorrect
- CMaximising the market share of the company in every country of operation
- DMinimising the company's total borrowing at all times
Explanation
AFM treats shareholder wealth maximisation as the primary financial objective, while recognising constraints imposed by other stakeholders, regulation and ethics. Accounting profit can be manipulated and ignores risk and timing, so it is not the foundation objective. Market share and minimal borrowing are secondary or operational aims.
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