A financial manager should make decisions based on:
A)the effects those decisions will have on current profits.
B)the best interests of the current employees.
C)the welfare of the current shareholders.
D)minimizing the firm's tax liability.
E)their personal goals and ambitions.

Question

Quizplus · Accepted Answer

A financial manager's primary responsibility is to maximize the wealth of the firm's shareholders. Thus, decisions should be based on the welfare of the current shareholders to increase the firm's long-term value. While current profits are important, they should not be the only factor considered. The welfare of employees is also important, but not at the expense of the firm's overall success. Minimizing tax liability is also a consideration, but again, not at the expense of the firm's shareholders. Personal goals and ambitions should not influence the decision-making process for the benefit of the company.

A Financial Manager Should Make Decisions Based On