Final answer:
The primary goal of financial management is to increase the firm's market value, involving strategic investment, financing decisions, and enhancing shareholder wealth.
Step-by-step explanation:
The primary goal of financial management is E. Increasing the market value of the firm. This goal encompasses a wide range of activities, all aimed at maximizing the wealth of the company's shareholders. Financial management involves making decisions such as investing in assets that will yield profits in the future, financing these investments through various capital sources like early-stage investors, reinvesting profits, borrowing, or selling stock, and managing the organization's financial health to enhance its market value. The increase in market value ultimately signifies the success of the financial strategy as it reflects both the growth potential and current performance of the firm.
Effective financial management ensures that a firm grows by reinvesting a portion of its profits sensibly, to create additional value. Financial managers also focus on how capital markets transform financial flows, understanding that the markets can repackage financial capital from those who supply it to those who demand it. Ultimately, by employing good financial practices, firms can raise their market value, which is the main answer to what the goal of financial management should be.