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Shareholders are actually owners of the company in which they hold stock in. All decisions should be made with the consideration of maximizing shareholders wealth. It is not to just increase the size of the company or to see that executives get rich but rather to maximize the return for shareholders/owners of the corporation.
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Explain the difference between price consumption curve and a demand curve?
A price consumption curve identifies the utility maximizing combinations of two goods as the price of one of the goods changes. When the price of one of the goods declines, the budget line will pivot outwards, and a new utility maximizing bundle will be chosen. The price consumption curve connects all such bundles. A demand curve is a graphical relationship between the price of a good and the (utility maximizing) quantity demanded of a good, all else the same. Price is plotted on the vertical axis and quantity demanded on the horizontal axis.
Why is wealth an abstract noun?
The noun wealth is an abstract noun because wealth is not a physical thing. Wealth is a sum total of a person's money or property, their financial wherewithal, or even a person's good characteristics, abilities, positive relationships, etc.
How is it possible that Poverty and Inequality continues in a supposed wealth producing world?
Because the wealth is given to very few. It being human nature not to share something good, inequality is created and since the wealth is never given to the poor, so is poverty.
When is the profit-maximizing quantity of output reached?
To maximise profits, the quantity of output reached (supply) must be lesser than the demand, increasing the value and consequently the price of a certain good or service.
Profit maximization is the basic objective of firm?
A firm's main objective should be to make decisions that maximize the value of the company for its owners, and as the owners of a company are its shareholders, the main financial objective should be 'the maximization of shareholder wealth'. Since shareholders receive their wealth through dividends and capital gains, shareholder wealth will be maximized by maximizing the value of dividends and capital gains that shareholders receive over time. Problems with the 'maximization of profits' objective: Firstly, there are quantitative difficulties associated with profit. Maximization of profits as a financial objective requires the profit to be defined and measured accurately, and that all the factors contributing to it are known and can be taken into account. It is very doubtful that this requirement can be met on a regular basis. E.g- If 5 auditors go into the same company, it is very likely that each will come out with a completely different profit figure. A second problem concerns the timescale over which the profit should be maximized. Should profit be maximized in the short term or the long term?? Given that profit considers one year at a time, the focus is likely to be on short-term profit maximization at the expense of long-term investment, putting the long term survival of the company into doubt. There are many examples of companies going into liquidation shortly after declaring high profits. Check out - Polly Peck Plc's dramatic failure in 1990! (good example) The third problem is that profit does not take account of or make any allowance for risk! It would be inappropriate to concentrate efforts on maximizing accounting profit when this objective does not consider one of the key determinants of shareholder wealth. So the 'maximization of profit' is not a suitable core objective for a company. That is not to say that a company does not need to pay attention to its profit figures, since falling profits of profit warnings are taken by the financial markets as a sign of financial weakness. Instead these sort of profit targets/objectives should can serve a useful purpose in helping a company to achieve short-term or operational objectives within its overall strategic plan.
Why maximizing shareholers' wealth is always the goal of a firm instead of maximizing profits of the firm's?
The foundation of a firm is the investment, the wealth of its promoters and more importantly the share holders. Share holders have invested their money in the firm basing on the confidence they have on the firm and believing that their investment will be safe and will fetch good reasons. Once their trust is shaken, it will ruin the firm. On account of all these, the primary goal of a firm is to maximise the share holders' wealth.
What new philosophy characterized the renaissance?
Humanism was a key philosophy of the Renaissance, emphasizing the value and potential of humans, their abilities, achievements, and the importance of education, reason, and critical thinking. It focused on the study of classical literature, art, and culture, as well as the celebration of individual potential and creativity.
What are the roles played by shareholders directors and auditors in terms of interacting with published financial statements of the company?
Shareholders are the owners. They are very interested in seeing if their investment is producing good returns. Their role will be to analyse, and protect their interests.Directors are appointed by the shareholders to run the company. They are answerable to the shareholders for company performance. Their jobs and future depend on giving shareholders what they want, normally increased wealth, but ethical considerations are increasingly important. Their role is caretaking and maximizing! They will know what the financial statements say before they are published.Auditors generally have an impassionate relationship with the financial statements. They probably produced them anyway, and would have taken an objective view when doing so. Naturally they would be happy to see their client (the company) succeed, and they would be concerned if they see a decline in profitabilty or sustainability of the company. However, auditors have no responsibility to share in managing the company. This is the sole prerogative of the directors together with their appointed managers. Their interaction with the statements may be one of 'pride of accomplishment'! and may be to hope to be appointed again (or not!) next year!
How does satisficing decision differ from maximizing decision?
Satisficing decision means accepting a satisfactory, or good, result. Maximizing decision means not accepting any result except the best.
What does the quote the love of evil is the root of all money mean?
This quote means that greed and immoral actions driven by a desire for wealth are the foundation of all monetary-driven corruption and wrongdoing in society. It suggests that when individuals prioritize pursuing money at any cost, they are more likely to engage in unethical behavior.
Why does health is wealth?
If you have the good health you can earn the wealth because when your health is not good you can not even go out and earn money. so, keep a good health then you will have a good wealth.
Will managers always make decisions that will be in the best interests of shareholders?
No. Their pay arrangement can give you a good indication as to how well they will act on the shareholders' behalf.
The goddess of wealth and good fortune?
The goddess of wealth and good fortune is goddess Laxmi.
Martin Luther King Jr philosophy of non volience?
M.L.K's philosophy is about non violence and it is a philosophy that is hard to put in action, but if you can you are a good person with a good heart.
What is a good sentence with the word philosophy in the sentence?
My philosophy is called 'The Golden Rule'.
What is a sentence with the word philosophy in it?
Here are some sentences.Her philosophy was to love everyone.What is his philosophy?
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.
