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Financial Management - Finance – An Introduction

Goals of Financial Management - Financial Goals

   Posted On :  19.06.2018 09:47 pm

Goals act as motivators, serve as the standards for measuring performance, help in coordination of multiplicity of tasks, facilitate in identifying inter departmental relationships and so on.

Goals of Financial Management
 
Goals act as motivators, serve as the standards for measuring performance, help in coordination of multiplicity of tasks, facilitate in identifying inter departmental relationships and so on. The goals can be classified as official goals, operative goals and operational goals.
 
The official goals are the general objective of any organization. They include mechanism of ROI and market value of the firms.
 
The operative goals indicate the actual efforts taken by an organization to implement various plans, policies and norms.

The operational goals are more directed, quantitative and verifiable. In fine, it can be inferred that the official, operative and operational goals are set with a pyramidal shape, the official goals at the helm of affairs (concerned with top level executives) operative goals at the middle level and operational goals at the lower level.

Following are the other objectives of financial management.

a. To build up reserves for growth and expansion

b. To ensure a fair return to shareholders

c. To ensure maximum operational efficiency by efficient and effective utilization of finances.  

The financial decisions can rationally be made only when the business enterprise has certain well thought out objectives. It is argued that the achievement of central goal of maximisation of the owner’s economic welfare depends upon the adoption of two criteria, viz., i) profit maximisation; and (ii) wealth maximisation.

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