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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
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.
What is the diffbetween wealth maximization and profit 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 .
Why agriculture products prices are high?
for profit maximization,because cost of production of products is costly therefore price is high to cover the cost of production
Why profit maximization is not the goal of a company or maximizing shareholders wealth is the goal of a firm?
Profit maximization is often criticized as a short-sighted goal because it focuses solely on immediate financial gains without considering long-term sustainability, ethical practices, or stakeholder interests. In contrast, maximizing shareholder wealth encompasses a broader perspective, aiming to enhance the value of the company over time while balancing the needs of customers, employees, and the community. This approach fosters sustainable growth, brand loyalty, and a positive corporate reputation, ultimately benefiting shareholders in the long run. Thus, prioritizing shareholder wealth aligns a firm's objectives with sustainable business practices and long-term success.
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
What is meant by wealth maximization in a corporate finance environment How are corporate securities contingent claims on the firm's value?
Wealth maximization has been accepted by the finance managers, because it overcomes the limitations of profit maximization. Wealth maximization means maximizing the net wealth of the company's share holders. Wealth maximization is possible only when the company pursues policies that would increase the market value of shares of the company.
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
Why shareholder wealth maximization is preferd over other goals?
Shareholder wealth maximization is preferred because it aligns the interests of management with those of the owners, ensuring that decisions are made to enhance the overall value of the company. This focus encourages efficient resource allocation, driving profitability and long-term growth. Additionally, prioritizing shareholder wealth provides clarity in performance measurement and accountability, which can lead to better strategic planning and investment decisions. Ultimately, a strong emphasis on maximizing shareholder value can contribute to broader economic growth and stability.
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
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.
Is profit maximization an appropriate for a business?
Profit maximization is the ONLY appropriate goal for a business. Even under a so-called "social responsibility" regime, a business only engages in such schemes because it thinks it can increase profits by doing so.
What is the advantage of using external compensation for an op amp?
because it helps in noise reduction,bandwidth maximization
What is the diffbetween wealth maximization and profit 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 .
Does the traditional profit maximization model hold relevance in modern world?
Yes, the traditional profit maximization model still applies because resources are still limited. To make sure you are getting the most money, you have to consider what generates the most profit based on limited resources and other constraints.
Why are fixed costs are irrelevant in profit maximization decision?
Fixed costs are considered irrelevant in profit maximization decisions because they do not change with the level of production or sales; they remain constant regardless of output. Profit maximization focuses on marginal costs and marginal revenues, which directly impact decision-making. Since fixed costs do not influence the marginal analysis, they do not affect the optimal output level. Thus, decisions should be based on variable costs and revenues that fluctuate with production levels.
Why agriculture products prices are high?
for profit maximization,because cost of production of products is costly therefore price is high to cover the cost of production
