Wealth maximization means maximization of shareholders' wealth. It is an advanced goal compared to profit maximization.
Survival of company is an important consideration when the financial manager makes any financial decisions. One incorrect decision may lead company to be bankrupt.
Maintaining proper cash flow is a short run objective of financial management. It is necessary for operations to pay the day-to-day expenses e.g. raw material, electricity bills, wages, rent etc. A good cash flow ensures the survival of company.
Minimization on capital cost in financial management can help operations gain more profit.
To plan a sound capital Structure.There should be sound and fair composition of capital so that a balance is equal maintained between debt and equity capital.
To optimum funds utilization. Once the fundsare proured They should be utilized in maximum possible way at least cost.
Scope of Financial Management
Estimating the Requirement of Funds: Businesses make forecast on funds needed in both short run and long run, hence, they can improve the efficiency of funding. The estimation is based on the budget e.g. sales budget, production budget.
Determining the Capital Structure: Capital structure is how a firm finances its overall operations and growth by using different sources of funds. Once the requirement of funds has estimated, the financial manager should decide the mix of debt and equity and also types of debt.
Investment Fund: A good investment plan can bring businesses huge returns.
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