Question : Questions : Business Finance and Its Meaning
Statement 1: Financial planning aims to maximize shareholder wealth and company value.
Statement 2: Financial planning ignores the interests of stakeholders.
Option 1: Statement 1 is true, and statement 2 is false.
Option 2: Statement 1 is false, and statement 2 is true.
Option 3: Both statements 1 and 2 are true.
Option 4: Both statements 1 and 2 are false.
Correct Answer:
Statement 1 is true, and statement 2 is false.
Solution : The correct answer is (a) Statement 1 is true, and statement 2 is false.
Statement 1 is true. Financial planning, in the context of a company, aims to optimize the allocation of financial resources and make decisions that maximize shareholder wealth and enhance the overall value of the company. It involves strategies to increase profitability, manage risks, and create long-term value for shareholders.
Statement 2 is false. Financial planning does not ignore the interests of stakeholders. In fact, financial planning often takes into account the interests of various stakeholders, including shareholders, employees, customers, and the community. Effective financial planning considers a broader perspective, aligning the interests of stakeholders with the overall goals and sustainability of the business. Balancing the interests of stakeholders is an important aspect of responsible financial planning.
