'Financial management refers to the efficient acquisition, allocation and usage of funds by the company. It is carried out with the primary aim of reducing the cost of the funds that are procured minimising the risk and effective distribution of funds to different opportunities.
The primary objective of financial management is 'Wealth maximisation' which refers to taking those financial decision that aim at maximising the shareholders' wealth. That is, to opt for those financial decisions that proves gainful from the point of view of its shareholders. The shareholders will only gain when the market value of the shares held by them rises, which in turn takes place when the benefits from the financial decisions made by the company exceeds the cost involved. When the financial decision successfully fulfil the objective of wealth maximisation, other objectives such as proper utilisation of funds, maintenance of liquidity, maximisation of profits and meeting financial obligation are automatically fulfilled.