CA Inter P6 · Chapter 1 · Question 7 of 7
Under the modern approach to financial management, the finance manager's role is best described as:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Taking part in decisions on how funds are allocated and used, how they are raised and how returns are distributed, with the aim of maximising the value of the firm
Explanation
The traditional approach saw finance as procuring funds for episodic events such as incorporation or mergers. The modern approach is wider: it covers investment, financing and dividend decisions as an integrated whole, aimed at maximising shareholder wealth. Bookkeeping belongs to accounting, and maximising sales is not a financial management objective.
More Scope and Objectives of Financial Management MCQs
- Q2The board of Saraswati Polymers Ltd is deciding what proportion of a new ₹ 40 crore project should be funded by debentures and what…
- Q3Which of the following is a recognised limitation of profit maximisation as the objective of a company?
- Q4The conflict of interest that can arise when managers, acting as agents, pursue perks and job security rather than maximising the wealth…
- Q5Which of the following is an example of an agency cost borne by shareholders?