What is the primary goal of financial management?

The primary goal of financial management is to maximize the value of the firm for its shareholders. This objective focuses on increasing the firm's stock price and overall worth, which aligns the interests of the management with those of the shareholders. When the value of the firm increases, shareholders benefit through capital gains and dividends, creating a direct link between financial decision-making and shareholder wealth.

This goal encompasses a variety of financial activities, such as making investment decisions, financing choices, and managing cash flow. Through careful analysis and strategic planning, financial managers seek to ensure that resources are allocated efficiently to generate the highest possible return on investment, thus enhancing overall firm value.

Other options do not encompass the overarching objective of financial management. Minimizing expenses can be a strategy, but it does not necessarily lead to an increase in firm value if it compromises growth or innovation. Increasing the number of employees may improve operations but does not directly contribute to shareholder value unless it enhances productivity or revenue. Expanding global market reach may be a part of a growth strategy, but again, unless it directly results in value creation for shareholders, it is not the primary focus of financial management.