Fin 200 Week 1

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Write a 200- to 300-word response describing the goals of financial management. The description should include how earnings are valued, how shareholder wealth can be maximized, and how management decisions affect stockholder wealth. The goals of financial management include profits. The problem with profits is that if you profit too or too little, your company will look bad. The key to having good financial management is having the ability to see that sometimes profit is not everything. Sometimes it looks better for the company’s stock share to go down a little as opposed to up. This will make it more desirable for people who are looking at buying the stock. The valuation approach is looking at everything in the company and trying to figure out where the company is going. It needs to look at risk, quality and reliability of earnings, and the increase or decrease of the earnings. I would think of this as an appraisal of how the company may do. Maximizing shareholder wealth seems tricky. The stock prices are not controlled by the company itself but by the way that the economy is. It would be very important for the company to make sure that they knew how the economy was doing so that they can make the best business decisions for their stockholders. Management has to be careful about the decisions that they make because they can affect the price of the stock including the wealth of its stockholders. These decisions need to be weighed very heavily because sometimes what is best for the stockholders, may not be best for the manager.
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