Which of the following is generally considered the primary financial goal of a business organization?

• A. Maximizing total sales revenue
• B. Maximizing shareholder wealth
• C. Increasing the number of employees
• D. Minimizing operating costs

Answer: (B)

Verified step by step guidance

1. Understand the concept of the primary financial goal of a business organization. In financial accounting, the primary goal is typically aligned with the interests of the owners or shareholders of the business.
2. Recognize that maximizing shareholder wealth is considered the primary financial goal because it reflects the value of the business and ensures long-term sustainability and profitability.
3. Evaluate why other options, such as maximizing total sales revenue, increasing the number of employees, or minimizing operating costs, are secondary goals. These may contribute to the overall success of the business but do not directly align with maximizing shareholder wealth.
4. Consider how shareholder wealth is maximized. This is achieved by increasing the market value of the company's shares, which is influenced by profitability, efficient operations, and strategic decision-making.
5. Conclude that while other goals are important for operational and strategic purposes, they are subordinate to the overarching goal of maximizing shareholder wealth, which is the primary financial objective of a business organization.