GOALS OF A FIRM for Financial management

INTRODUCTION-Any corporation or a firm invest in assets which can be of two types 1)Those are tangible    2) Those are intangible.

Tangible assets are like machinery or the land etc .Intangible assets are like brand names and patents.

Now comes the question How corporations Finance these assets or how they actually buy it? The answer to this is by either borrowing money from the bank or by using its cash flow or by selling additional shares of the stock to the shareholders and raising the money.

THE PRIMARY GOAL OF ANY FIRM is to maximize its assets that would in turn maximize the entire valuation of the firm and establish the trust of the investors and the shareholders in the credibility of the firm.A large corporation may have hundreds of thousandsof shareholders. These shareholders differ in manyways, such as their wealth, risk tolerance, and investment capability. Yet we will see that they usually endorse the same financial goal: they want the financial managers to increase the value of the corporation and its current stock price.Thus the secret of success in financial management is to increase value. That is easy to say, but not very helpful. Instructing the financial manager to increase value is like advising an investor in the stock market to“buy low, sell high.” 

To actually be able to do it is not easy and requires a very good understanding of the financial resources of your corporation and the financial environment of the Financial markets.

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