Question : Questions : Business Finance and Its Meaning
Statement 1: Financial planning contributes to maximizing shareholder wealth and company value.
Statement 2: Financial planning does not consider 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 is designed to contribute to maximizing shareholder wealth and company value. Through effective financial planning, a company can optimize its operations, investments, financing, and other aspects to enhance profitability and create value for shareholders.
Statement 2 is false. Financial planning does consider the interests of stakeholders, including shareholders. The objective of financial planning is to align financial decisions with the interests of various stakeholders, such as shareholders, investors, creditors, and the broader community. It's about balancing the interests of all parties involved in the business to achieve the best outcomes.
Statement 1: Financial planning aims to enhance shareholder wealth and company value.
Statement 2: Financial planning disregards the interests of stakeholders.
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