ACCA FM · Chapter 1 · Question 1 of 10
For a listed company operating in the private sector, which of the following is generally regarded as the primary financial objective?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Maximisation of shareholder wealth
Explanation
Financial management theory assumes that the primary objective of a listed company is to maximise the wealth of its ordinary shareholders, who own the company and bear its residual risk. Shareholder wealth is reflected in dividends received and in the market value of the shares. Revenue growth, employment and tax minimisation may support this objective but are not the primary objective in themselves.
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