Question

250 words, in your own words

Why is the goal of financial management to maximize the current value of the company’s stock? In other words, why isn’t the goal to maximize the future value?

Answer 1

THE FOLLOWING ARE THE REASONS THAT THE GOAL OF FINANCIAL MANAGEMENT TO MAXIMIZE THE CURRENT VALUE OF THE COMAPNY'S STOCK AND NOT TO MAXIMIZE THE FUTURE VALUE.

1 THE BUSINESS IS TRING TO INCREASE THE STOCK PRICE AS THE VALUE OF FIRM INCREASES WITH THE INCREASE IN THE STOCK VALUE OF THE FIRM.

2 THE NET WORTH OF THE INDIVIDUAL ALSO INCREASES WITH THE INCREASE IN THE STOCK PRICE.

3 THE PERSON IS GET SATISFIED WITH THE INCREASE IN THE STOCK PRICE.

4 THE COMAPNY WILL GROW IN THE MARKET WITH THE INCREASE IN THE SHARE PRICE AS THE MARKET CAP OF THE COMPANY WILL INCREASE.

5 THE COMPANY WILL ABLE TO GENERATE THE NEW FUNDS EASILY AS THE IMAGE OF COMAPNY IS GOOD DUE TO THE GOOD RETURNS PROVIDED TO THE COMAPNY.

6 THE COMPANY WILL GROW WITH THE GROWING STOCK PRICES.