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What is meant by profit maximization?

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2008-04-03 06:46:16
2008-04-03 06:46:16

Making decision based on profit maximsation focus on accounting income and may be manipulated as it tends to focus on the short term, it can therefore be regarded as too simplistic as it does not consider cash flows, is biased towards short run returns and ignores the relative riskiness of the alternative.

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Related Questions


Profit maximization increase the graph of outputs.


what are the limitation and disadvantages of profit maximization


Under what conditions might profit maximization not lead to stock price maximization?"


wealth maximization is a stratigic target of the entity , while the profit maximizations is a tactical one . the profit maximization always concern with the operational plans .... and the wealth maximization always concern with top managements plans .


the difference between profit maximization and shareholders wealth maximization is that profit maximization is concern with profit that a company received based on inflow and outflow within a period while shareholders wealth maximization is concern with dividend and capital gain that shareholder received on a return of his/her investment.



Profit maximization ignores the risk associated with the stream of cash flow with the product. Also, profits for different types of stakeholders can not be maintained with profit maximization.


The benefits of profit maximization include top performance from workers and more market share for the customers. When a company focuses on profit maximization, their shareholders are happy.


profit maximization &wealth maximization of shareholders.


Profit maximization can be both good or bad. Done correctly, profit maximization helps the company provide great products and services for customers.


sales maximization technique is generally used in scale industries where base of the expenses is largelly fixed and where variable costs are limited. on the other hand profit maximization technique are used by variety of industries. total output is higher in sales maximization as compared to profit maximization


profit maximization is the (short run) process by which a firm determines the price and output level that returns the greatest profit


Profit Maximization model means a scenario where the busniess is runned by the motive of profit making and keep the cost low.



Shareholder wealth maximization is considered to be a more appropriate goal for the firm than profit maximization




Wealth maximization: To stay invested and multiply your invested money. The term is used for long-term investors. Short-term investors work for profit maximization. They sell their shares, as and when they get profit from the market.




If the company is public listed (trades in the stock market) their aim is shareholder wealth maximization whereas for a privately owned firm a profit maximization objective is appropriate.


well ... wealth maximizations is differ from profit maximization...in many ways ... and also can meet each other in various aspects . wealth maximization is a stratigic target of the entity , while the profit maximizations is a tactical one . the profit maximization always concern with the operational plans .... and the wealth maximization always concern with top managements plans . the two meet each other in the point of how to maximize the shareholders wealth .


Asset creation through wealth maximization is always welcome since the same generates employment for the masses as a whole,whereas profit maximization is beneficial for the employer/proprietor alone.


The goal of maximization of shareholder wealth is meant by; first, in most cases


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.



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