ACCA Applied Knowledge · Business and Technology · Accounting and finance functions within business organisations
Which of the following is the primary financial management objective of a company run for its shareholders?
The primary financial management objective of a company run for its shareholders is to maximise shareholder wealth, which comes from dividends and growth in share price. Other aims such as limiting tax or increasing staff numbers are secondary and may conflict with this main objective.
- AMaximising the number of employees
- BMaximising shareholder wealthCorrect
- CMinimising the tax paid in every year
Explanation
The traditional primary objective of financial management in a profit-seeking company is to maximise shareholder wealth, through dividends and share price growth. Minimising tax or maximising headcount may be secondary aims but are not the main objective.
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