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Shareholder wealth maximization is considered to be a more appropriate goal for the firm than profit maximization because?
Shareholder wealth maximization is considered to be a more appropriate goal for the firm than profit maximization
Goal of the firm?
profit maximization &wealth maximization of shareholders.
The differences between goal of a firm and profit maximization?
A goal of firm isn't always profit driven, it can be any cause. Profit maximization is revenue driven, making more money is it focus.
What are some of the problems involved with the use of profit maximization as the goal of the firm How does the goal of maximization of shareholder wealth deal with those problems?
Problems involved with the use of profit maximization as the goal of the firm due to numbers of reasons. 1 It ignore the timing of return. 2 It ignores the timing of returns. 3 It ignores the risk.
What are some of the problems involved in the use of profit maximization as the goal of a firm?
Uncertainity and timing are some of the problems
What are the shortcomings of the goal of profit maximization?
Profit maximization includes some shortcomings like it ignores the risk that corresponds to the project's stream of cash flow. The timing of returns are ignored with this objective and it does not have as much relevance to a monopoly firm.
Why is profit maximization not an appropriate goal of the firm?
A firm cannot survive with mere profit maximization, but must increase long-term security through investment and meeting shareholder expectations. This will increase their productive capacity for the furture as well as encourage the risky capital investment of the shareholders.
Explain the rationale for selecting shareholders wealth maximizatio as the objective of the firm?
Explain the rationare for selecting shareholder wealth maximization as the objective of the firm.Include a consideration of profit maximization as an alternative goal
Maximization of shareholder wealth as a goal is superior to profit maximization because?
it is operating cost
Why is profit maximization a primary goal to an organisation?
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The shareholder wealth maximization goal state that management should maximize the percentage value of the future returns to the owners of the firm?
owners of the firm
Is Profit maximization the primary goal of any business enterprise?
Yes, profit maximization is the primary goal of a business. If a business doesn't maximize profits the Board of Directors can request that the CEO leave.
