10 Questions
What is the primary objective of financial management?
Maximizing the value of the firm for stockholders
What is the role of financial managers (FM) in an organization?
Specialized professionals directly reporting to senior management
What does short-term working capital management in financial management primarily focus on?
Current assets and current liabilities
What is the main objective of profit maximization according to financial management?
Happens when marginal cost is equal to marginal revenue
What is a short-run objective of financial management?
Maintaining proper cash flow
Financial management is primarily concerned with maximizing the value of the firm for customers.
False
Treasury management is not related to the day-to-day management of funds.
False
Long term strategic financial management includes capital budgeting and dividend policy.
True
Maintaining proper cash flow is a long-run objective of financial management.
False
Profit maximization occurs when marginal cost is equal to marginal revenue.
True
Study Notes
Financial Management Objectives
- Primary objective of financial management: maximize the value of the firm for shareholders, not customers
- Role of financial managers (FM): manage the financial resources of an organization to achieve its objectives
Working Capital Management
- Short-term working capital management: primarily focuses on managing current assets and liabilities, ensuring sufficient liquidity and profitability
Profit Maximization
- Main objective of profit maximization: occurs when marginal cost is equal to marginal revenue
- Not a long-run objective of financial management; rather, a short-run objective
Long-Term Strategic Financial Management
- Includes capital budgeting and dividend policy
- Maintaining proper cash flow is a long-run objective of financial management, related to treasury management, which involves the day-to-day management of funds
Test your knowledge of financial management with this quiz! Explore topics such as profitability, expenses, cash, credit, and maximizing the value of the firm for stockholders. Challenge yourself with questions related to the efficient acquisition and deployment of short- and long-term financial resources to achieve enterprise objectives.
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