The Role of Managerial Finance: All Rights Reserved
The Role of Managerial Finance: All Rights Reserved
The Role of Managerial Finance: All Rights Reserved
The Role of
Managerial
Finance
The word finance was originally a French word. In the 18th century, it
was adapted by English speaking communities to mean “the
management of money.”
Since then, it has found a permanent place in the English dictionary. Today, finance
is not merely a word else has emerged into an academic discipline of greater
significance. Finance is now organized as a branch of Economics.
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ii) Wealth maximization is nothing, it is also profit maximization,
it is the indirect name of the profit maximization.
(iii) Wealth maximization creates ownership-management
controversy.
(iv) Management alone enjoy certain benefits.
(v) The ultimate aim of the wealth maximization objectives is to
maximize the profit.
(vi) Wealth maximization can be activated only with the help of
the profitable position of the business concern.
Profit maximization may not lead to the highest possible share price
for at least three reasons:
1. Timing is important—the receipt of funds sooner rather than later is preferred
2. Profits do not necessarily result in cash flows available to stockholders
3. Profit maximization fails to account for risk