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Welcome to the NCERT Solutions for Class 12 Business Studies - Chapter Financial Management. This page offers a step-by-step solution to the specific question from Exercise 2, Question 3:
What are the main objectives of financial management? Briefly explain.
. With detailed answers and explanations for each chapter, students can strengthen their understanding and prepare confidently for exams. Ideal for CBSE and other board students, this resource will simplify your study experience.What are the main objectives of financial management? Briefly explain.
The two main objectives of financial management are:
Primary objective: The primary objective of financial management is maximization of shareholder’ wealth, which is achieved by increase in value of shares or the market price of the shares.
Secondary objectives: In order to achieve the primary objective of wealth maximization, financial management should aim to the following objectives:
Profit maximization/effective utilization of fund: Effective utilization of funds, by ensuring that benefits of an investment exceeds its cost.
Availability of funds at reasonable costs: To raise funds at minimum cost and minimum risk, through effective financing decision.
Ensure safety of funds: To ensure safety of funds by creating reserves, reinvesting profits etc.
Maintaining adequate liquidity: To maintain financial liquidity and profitability through working capital decision.
Avoiding idle finance: Idle finance not only adds to the cost of funds but also encourages wasteful expenditure. Therefore, financial management avoids over capitalization.
NCERT questions are designed to test your understanding of the concepts and theories discussed in the chapter. Here are some tips to help you answer NCERT questions effectively:
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Welcome to the NCERT Solutions for Class 12 Business Studies - Chapter . This page offers a step-by-step solution to the specific question from Excercise 2 , Question 3: What are the main objectives of financial management? Briefly explain.....
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