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Wealth maximization is a function of share price maximization discuss?
Wiki User
∙ 14y ago
the difference between Profit maximisation and share price maximisation
Wiki User
∙ 14y ago
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Why wealth maximization is a function of share price maximization?
because the maximazation is a Behavior that attempts to maximize such performance measures as revenue, profits, contribution margin, or expected net present value
Under what conditions might profit maximization not lead to share price maximization?
Profit maximization will not lead to share price maximization if the organization is working on building wealth in the future. With long range goals, the profits will be delayed until future goals are met.
Why is that profit maximization may not necessary lead to wealth maximization?
Because as the price of a commodity increases, the purchasing power of consumers reduces. Consumers will then shy away and only few people would be able to pay for the extra. Thus, increase in profit may not necessarily mean maximization of wealth.
Profit maximization vsealth maximization in financial management of an organization?
Profit maximization is also about increasing the EPS (earning per share) of the shareholders and to maximise the net present worth. Main objective of co is profit maximization EPS: net profit/ no of shares outstanding. Wealth maximization is anything having value. Anything which can be expressed in money value or economic value which is considered as wealth. Baisc objective of a co is wealth maximization. How to increase the wealth: By producing a quality product at a competitive rate. By giving product at reasonable price. Good after sales service. this all things leads to increase in co's wealth.
What is the definition of 'wealth maximization'?
wealth maximisation is the appropriate objective of an enterprise financial theory asserts that wealth maximization is the single substitute for a stock holders utility. when the firm maximizes the stockholders wealth the individual stockholder can use this wealth to maximize his individual utility.it can be calculated as: stock holder current wealth in a firm =(n.o of share owned) *(current price per share)
Under what conditions might profit maximization not lead to stock price maximization?
Under what conditions might profit maximization not lead to stock price maximization?"
Can there be difference between profit maximization and shareholders wealth maximization?
Profit maximization is short term as compare to share holder's wealth maximization, Managers should focus on Share holder's wealth maximization because its what they are hired for. also there are sevseal reasons such as.... 1) the share holders wealth is be considered.. 2)profit maximization doesnt say which type of profit it should maximize-short term or long term 3)profit maximization ignores the social values but only aims at earning maximum profit. 4)wealth maximization also considers improving the goodwill of the organization
What is the difference between stock price maximization and price maximization?
Profit maximization does not reflect (1) the timing of profits and (2) the riskiness of different operating plans. However, both of these factors are reflected in stock price maximization.
How do find the consumer surplus given only the demand function and price?
You count how many widgits are left after profit maximization has been achieved.
What are the difference between value maximation and profit maximation?
Value maximization and profit maximization are very much related, the main difference being- value maximization means increases in owners' wealth achieved by maximizing of the value of a firm's common stock. profit maximization is the process by which a firm determines the price and output level that returns the greatest profit. the other difference among the two could be sited as- value maximization is seen as long term objective of a firm, whereas profit maximization is generally a short term objective.
Stockholder wealth maximization is called?
the appropriate goal for management decisions; considers the risk and timing associated with expected cash flows to maximize the price of the firms common stock
Under what condition might profit maximization not lead to stock price maximization?
There are various conditions under which profit maximization may not lead to stock price maximization. Some of them include outstanding shares and assets falling below the cost of the debt among others.
