Question

How do financial managers process to satisfy their objectives to shareholders?

Course：Business Finance

Use your own word to answer

Answer 1

Financial Managers satisfy objectives of shareholders by following process
they focus on increasing ROE. This can be done by increasing returns or profits and investing in higher profitable industries. Following on optimal debt equity structure also increases return to equity holders and price of share goes up. Financial managers should focus on optimising the cost of capital as it increases shareholder value. This can be also done by undertaking projects with higher NPV which will increase the value to the firm.