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BRILLIANT’S Conceptual Framework of Finance Functions 25

dividends whereas a firm with objective {Z`{_V ^wJVmZ H$aVr h¡ O~{H$ àm°{\$Q> _¡[ŠO_mBOoeZ
of profit maximization may refrain from H$m CÔoí` aIZo na dh H$ånZr eo`ahmoëS>g© H$mo
payment of dividend to its shareholders. {S>{dS>oÝS> XoZo go ~MZo H$m à`mg H$aoJrŸ&
(iii)Shareholders also prefer an increase in the (iii) eo`ahmoëS>g© ^r cm^ ~‹T>Zo H$mo d¡ëW _¡[ŠO_mBOoeZ
firm's wealth rather than increasing Ho$ ê$n _| hr XoIVo h¢Ÿ&
profit.

Global financial crisis has once again emphasized the need for effective financial management.
The current financial crisis provides an opportunity to take a fresh look at the various aspects
of financial management process that shapes the world economy.
{díd ñVa na N>m`r \$m`Z|{e`b H«$m`{gg Zo EH$ ~ma {\$a go à^mdr \$m`ZopÝe`c _¡ZoO_|Q> Ho$ _hËd H$mo
{gÕ H$a {X`m h¡& dV©_mZ \$m`ZopÝe`c H«$mB{gg h_mao {c`o EH$ g~H$ h¡ {H$ h_ \$m`ZopÝe`c _¡ZoO_|Q> Ho$
{d{^Þ nhcwAm| H$m nwZamdcmoH$Z H$a|, Omo nyao {díd H$s AW©ì`dñWm H$mo ghr ñdê$n àXmZ H$aVo h¢&

The maximization of a firm's value as \$_© H$s d¡ëW `m d¡ë`y _¡[ŠO_mBOoeZ hr g~go
reflected in the market price of share is viewed _hËdnyU© cú` h¡, Omo eo`g© Ho$ _mH}$Q> d¡ë`y Ho$ ê$n _|
as a proper goal of a firm. The profit maximi- àH$Q> hmoVm h¡Ÿ& dmñVd _| àm°{\$Q> _¡pŠO_mBOoeZ, d¡ëW
zation can be considered as a part of wealth
maximization strategy. It may be noted that _¡[ŠO_mBOoeZ H$s ñQ´>oQ>oOr H$m hr {hñgm h¡Ÿ& dV©_mZ g_`
now the focus of financial management is on _| \$m`ZopÝe`c _¡ZoO_|Q> H$m \$moH$g ñdm_r Ho$ BpŠdQ>r
the value of owner's equity capital. The H¡${nQ>c na hmoVm h¡Ÿ& Bg àH$ma d¡ëW _¡[ŠO_mBOoeZ H$r
economic concept of profit maximization has AdYmaUm Zo àm°{\$Q> _¡[ŠO_mBOoeZ H$m ñWmZ co {c`m h¡Ÿ&
been replaced by the wealth maximization
criteria. Due to some technical limitations, àm°{\$Q> _¡[ŠO_mBOoeZ H$s AdYmaUm _| Hw$N> H${_`m§ hmoZo
profit maximization can not be applied in real Ho$ H$maU dh ì`mdhm[aH$ OJV H$s n[apñW{V`m| na Iar
world situation. It may be noted that wealth Zht CVaVrŸ& dmñVd _| d¡ëW _¡[ŠO_mBOoeZ H$s AdYmaUm,
maximization is only an extension of profit àm°{\$Q> _¡[ŠO_mBOoeZ H$m hr AmYw{ZH$ ñdê$n h¡Ÿ& `{X
maximization. Where the time period is short g_` Ad{Y gr{_V h¡ Am¡a A{ZpíMVVm H$m ñVa C±Mm h¡
and the degree of uncertainty is higher, wealth
maximization and profit maximization are Vmo d¡ëW _¡pŠO_mBOoeZ Ed§ àm°{\$Q> _¡pŠO_mBOoeZ XmoZm|
essentially similar. g_mZ hr hmoVo h¢Ÿ&

Other Objectives of Financial Man- \$m`Z|{e`b _¡ZoO_|Q> Ho$ AÝ` Am°ãOopŠQ>ìg
agement
Profit maximization and wealth àm°{\$Q> _¡pŠO_mBOoeZ VWm d¡ëW _¡pŠO_mBOoeZ
maximization are the main objectives of \$m`Z|{e`b _¡ZoO_|Q> Ho$ _w»` CÔoí` h¢& BZHo$ A{V[aŠV
financial management. There are also some Hw$N> AÝ` CÔoí` ^r h¢ {OÝh| \$m`Z|{e`b _¡ZoOa H$mo àmßV
other objectives which a finance manager
should achieve. Following are the other H$aZm Mm{hE& \$m`Z|{e`b _¡ZoO_|Q> Ho$ AÝ` Am°ãOopŠQ>ìg
objectives of financial management: {ZåZ{b{IV h¢…
1. To provide support for decision 1. {S>[gOZ _¡qH$J Ho$ {bE gnmoQ>© àXmZ H$aZm…
making: Financial management needs to \$m`Z|{e`b _¡ZoO_|Q> Am°naoeZb {S>grOÝg H$mo gnmoQ>© H$aVm