The goal of financial management is to maximize one’s wealth or profit, whether it is personally or professionally. When it comes to personal financial management, a person only has to think about their wants and desires, if the financial plan that they create doesn’t work, then they are only affecting themselves. When finances are managed for a business or corporation, it affects employees and stockholders if there are any.
One factor to consider is the value of money that is being earned. There has to be a clear understanding of decisions made that will determine earnings. The financial manager for a business has to keep investors or stockholders in mind because, the decisions they make affect the money that these people earn. When you do have more than one person involved in the profit, you as the financial manager will make decisions that not everyone will agree with. The key is to make decisions that are the mutually beneficial for all.
Maximizing the wealth of stockholders is always the goal for a financial manager however; this can be the most difficult task. This is difficult due to not being able to control the stock price for a company. A very successful and profitable company can struggle on the stock market because of the factors that affect the stock price. The overall goal to put the stockholder at ease is by the long term trends of the company. Prices fluctuate daily, so keeping the stockholder focused on long term stability is important.
Every decision