IGNOU BCOE 143 2026 2027 - Explain the objectives of financial management. How does the goa

Question

Explain the objectives of financial management. How does the goal of wealth maximisation
differ from profit maximisation as a financial objective?

05 Aug 2026

Answer :

Word Count : 506

Financial management refers to the planning, procurement, allocation and effective utilisation of financial resources in an organisation. Its primary purpose is to ensure that funds are available when required and are used in a manner that promotes the long-term success of the business. The major objectives of financial management are closely related to investment, financing and dividend decisions. One important objective is profitability. Financial management seeks to ensure that the business earns adequate returns by controlling costs, selecting profitable investments and making efficient use of available resources. Another objective is efficient utilisation of funds. Financial managers must allocate funds among different assets and activities so that resources are neither unnecessarily blocked nor wasted. Maintaining adequate liquidity is also essential because an

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