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What are the problems involved in the use of profit maximization?
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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.
Theories underlying in objective of a firm?
Thoeries underlying the Objective of a Firm, mainly talk about the subject of Ethics in Business. Debate is going on since a long time, as to whether every Firm's Objective needs to be ETHICAL? the answer may seem as simple as "YES", but the counter arguements that follow are difficult to answer. Does a Cigratte Manufacturing Company have an ethical objective? Are Liquior Producers into Ethical Business? These Companies thrive at the cost of Consumer's Health. Nevertheless they are highly Profit Making. Coming to Profit Maximization, the question goes as to whether Profit Maximization Goal is justitfied? In a private enterprise, no one can have control over Profit maximization. If the profits are made with the use of Society's resources, such profits need to be sowed back for Societal Development. Abnormal Profits/Supernormal Profits indicate the presence of Monopoly, new entrants and market expansion can keep a check on Monopoly, which is a matter of time. Gyan Prakash Singh er_gyanpsingh@yahoo.com 9336691851 MBA(IT)
Why should a company stay in profit?
because some company earn many profit and save some profit to use in the day of bad profit
What do you have to do to make a nonprofit organization?
first make a small profitable organisation(eg. with your friends, so you don't have to pay them when you start off),then use the profit to grow your organisation,then use the profit to keep the organistion running.
What are some of the problems with ratio analysis?
There are many limitations, or "problems" with ratio analysis.Ratio analysis only gives a numeric result of a formula, but it does not tell you why a result is gained. To be useful, the result therefore needs to be further analysed.Anyone can plug numbers into a formula, but the figures need to be related to the actual scenario/organisation in question to find out why a result is such as it is.A further problem with ratio analysis is that different people/organisations can use different basis upon which to build a result. For example, "how profitable is my company?" .... we can calculate operational profit, net profit, gross profit and get very different answers, but still be talking about profitability.Ratio analysis is also subject to potential manipulation to make a result "look better".
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 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.
Use examples to show the difference in the profit maximization goal of perfect competition and monopoly?
Shut
What is profit maximization of corporation?
Profit Maximization is a process that companies undergo to determine the best output and price levels in order to maximize its return. Companies usually adjust production costs, sale prices, and output levels as a way of reaching its profit goal. Profit maximization is a good thing for a company, but can be a bad thing for consumers if the company starts to use cheaper products or decides to raise prices.
Among the multiplicity of objectives that a modern firm has profit maximization continues to be the most important Comment?
The success or failure of a firm is measured in terms of the amount of profit it is able to earn in a competitive market. Under profit management, one has to study various theories of profit, emergence of profit, functions of profit and its measurement, etc.Thoeries underlying the Objective of a Firm, mainly talk about the subject of Ethics in Business. Debate is going on since a long time, as to whether every Firm's Objective needs to be ETHICAL? the answer may seem as simple as "YES", but the counter arguements that follow are difficult to answer.Coming to Profit Maximization, the question goes as to whether Profit Maximization Goal is justitfied? In a private enterprise, no one can have control over Profit maximization. If the profits are made with the use of Society's resources, such profits need to be sowed back for Societal Development.The profit-maximization rule applies both to firms that are able to sell their product at a constant price and to firms that find they must reduce the price of their product to increase sales. In the real world, firms have to engage in trial-and-error discovery processes, searching for the profit-maximization point. But the process can be succinctly described by the marginal revenue-marginal cost rule.Profit is what is left over from a business after the bills are paid. without profit the company can not afford to re-invest in capital or have money to pay stockholders. I think Customer satisfaction if the basic motive and objective of firm. When we will more and more consider to satisfy customer needs and wants, automatically our secondary objective "profit maximization" will be achieved.
Is use of least-cost input combination a necessary condition for profit maximization is it a sufficient condition explain?
1. Minimization of Cost for a Given Level of Output: Least Cost Conditions
What is profit maximazation?
Profit Maximization is an interesting and rather deep issue in Economics. Please understand that this question can be answered from various approach and interpretation. There are other disciplines like Business and Management which offers a slightly different answer.For example, if you are a Finance student, you might use the term to maximize shareholder value. ( which can be different from this goal ). From my understanding, profit maximization alone cannot be an appropriate goal for a firm. When I teach my students, I often ask them, if each of you start a company today, will the reason to do so, just to maximize profit ?. Although many firms do aim to maximize profit in their existence, not all do so. When we say maximize profit, this means to get the most profit in the firm's existence. And there are other firms that don't. Other goals of the firm can be expansion or growth, where they focus on establishing more branches or growing larger, while other firms focus on sales maximization, where they focus on selling more. There are also other firms that put the environment or social issues as their goal. ( although this can be argued if it's a marketing ploy ). Apart from these different goals of firms, we need to understand that different firms have different goals. A small grocery shop will have a different goal than a multinational company. And a different environment can also affect the goals of the company. If the firms operates in a monopolistic environment, then profit maximization is possible, as it's the only firm. If the firm operates in a perfectly competitive environment, the goal of profit maximization is not possible, as profit can be influenced by new firms who enter the environment and old firms who exit it.
What is difference between profit maximization and wealth maximization. which one of them is more appropriate goal of financial management and why?
Profit MaximizationIt means the rupee income of firms. Firms may function in the market economy or government economy. In market economy prices are determined in competitive markets and those are expected to produce goods and services desired by the society.In accounting sense it tends to become a long-term objective, which measure not only the success of the products but also development of the market for it. The word profit implies a comparison of the operation of the business between two specific dates, which are usually separated by an interval of one year. In order to optimize those corporate sources of wealth on which national prosperity depends, the basic financial objectives of the companies is to maximize within socially acceptable limits, profit from the funds use of funds employed to them.Wealth MaximizationWealth Maximization is also known as Value Maximization or Net Present Worth Maximization. The company, which has profit Maximization as its objective, may adopt the policies fielding exorbitant profit in the short run which are unhealthy for the growth survival and overall interest of the business. Hence it is commonly agreed that the objective of the firm should be to maximize its value or health of the firm.Features of Wealth Maximization:8 It measures the benefit in terms of cash flow and avoids the ambiguity associated with the accounting profits.8 It consider both quality and quantity dimensions of benefits.8 It also incorporates the time value of money.
Is business ethics only consistent with short run profit maximization?
In the short run, a company may increase its profits by continuing to sell a product, even though, it knows that the product is defective or otherwise unsuitable for a particular use. In the long run, though, because of lawsuits, large settlements, and bad publicity, such unethical conduct will cause profits to suffer. Thus, business ethics is consistent only with long-term profit maximization. Quick Answer: No.
Why is marginal analysis involved in economics?
Economic theory makes much use of marginal concepts. Marginal cost, marginal revenue, marginal rate of substitution, marginal utility, marginal product, and marginal propensity to consume are a few examples. Marginal means on the margin and refers to what happens with a small change from the present position. It is the concept of economic choices to make small changes rather than large-scale adjustments. Marginal analysis is the key principle of profit-maximization in firms and utility maximization among consumers.
What are the problems involved in the use of profit maximization as the goal of the firm?
It could be. But for public corporations, the primary fiduciary duty is to maximize shareholders equity. And, that's done through a number of ways. Profit maximization is one way it can be done... but profits are the result of Revenue - Cost of Goods... and then there's other operating and financing functions before the numbers filter down to the bottom line of retained earnings and shareholders value. For example, cash flows or financing operations could be more important that simply maximizing profits.
How you use maximization in a sentence?
The women maximized her daily in-take of vitamens.
