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Obviously, he should concentrate on serving the interest of the owners of the business to the maximum extent. In short, objective of financial management is to maximise the wealth of the shareholders. According to this approach, owners 'interest can be best served by wealth maximisation and this is the real objective of financial management. Wealth maximisation means to increase the capital invested in the business by the shareholders. Market price of the shares is the index of the capital invested. If the market price of the shares increases, it can be said that capital (wealth) invested by the shareholders has been appreciating. On the contrary, fall in the market price of the shares has an adverse effect on their wealth. Wealth of the shareholders can be computed by the following formula: Shareholder's Current Wealth in a Company. For example, a person buys 100 shares of XYZ Co. at the rate of 100 per share. It means that his wealth in the company is worth 10,000 (100x100). After some time, market price of the share rises to 120 per share. It means that his wealth in the company has gone up to 12,000 (100x 120). In other words, his wealth has increased by 2,000. On the contrary, if the market price of the share falls to 80 per share, then his wealth in the company will be reduced to 8,000 (100 x 80). It is, therefore, clear that wealth maximisation is possible only when market price of the shares rises. Here, the question arises what steps should be taken by the finance manager to raise the market price of his company's shares? Answer to this question is that he should take all the three main finance decisions given below: (i) Optimum Investment Decision: It means he should take such decisions regarding investment as are relatively more profitable, (ii) Optimum Financing Decision: It means that he should make such a mix of debt capital and share capital as has the minimum cost of capital. (iii) Optimum Dividend Decision: It means that total profits of the comp

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