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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.

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

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


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.


What is the difference between shareholder's wealth maximization and shareholder's profit maximization?

Wealth is the accumulation of profit so it might seem that the two are maximized in the same way. But there are differences. Some examples:- Profit may be taxed. So wealth is maximized by maximizing the net of profit minus tax impacts which may occur in the future.- Increased value of an investment would add to wealth but would not show up as profit until the investment is sold.-Wealth may be obtained in ways other than profit. Receiving a gift or buying something for less than its real value may add to wealth but are not profit.-Stock buy-backs by a company produce no profit but increase stockholder wealth by driving up the value per share held.


What is the agency problem and how might it impact the goal of maximization of shareholder wealth?

The agency problem is a result of the separation between the decision makers and the owners of the firm. As a result managers may make decisions that are not in line with the goal of maximization of shareholder wealth.


What are two disadvantages of workers cooperative?

Two disadvantages of worker cooperatives include potential difficulties in decision-making and capital accumulation. Decision-making can be slower and more complex due to the need for consensus among members, which may hinder responsiveness and agility. Additionally, raising capital can be challenging, as traditional investors might be hesitant to invest in a cooperative structure that prioritizes worker ownership over profit maximization.

Related Questions

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

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


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.


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 .


What is the difference between shareholder's wealth maximization and shareholder's profit maximization?

Wealth is the accumulation of profit so it might seem that the two are maximized in the same way. But there are differences. Some examples:- Profit may be taxed. So wealth is maximized by maximizing the net of profit minus tax impacts which may occur in the future.- Increased value of an investment would add to wealth but would not show up as profit until the investment is sold.-Wealth may be obtained in ways other than profit. Receiving a gift or buying something for less than its real value may add to wealth but are not profit.-Stock buy-backs by a company produce no profit but increase stockholder wealth by driving up the value per share held.


When might you use a slimline form factor?

When space maximization is a factor.


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.


Why might a national government be hard to form under these conditions?

We can’t answer because we don’t know the conditions you were given.


What is the agency problem and how might it impact the goal of maximization of shareholder wealth?

The agency problem is a result of the separation between the decision makers and the owners of the firm. As a result managers may make decisions that are not in line with the goal of maximization of shareholder wealth.


What is a material which allows electrons to flow through it under certain conditions?

This might be a fundamental description of a semiconductor material.


Are there any conditions under which the freedom of speech and press could be denied and why might they be denied?

yes if you cant talk


In what ways is wealth maximization objective superior to the profit maximization objective?

Wealth maximation aims in maximising Shareholders wealth, employees wealth, profiting the external and internal parties of the firm, vendors, vendees, customers, investors, employers and all the parties interested in the benefit of the company. Wealth maximation results in increased goodwill, branding and reputation of the company. Where as profit maximation only deals with increased profits. Wealth maximation is a wider concept


What are the advantages and disadvantages of profit maximisation?

i dont knowSkip to main content.Subscribe to the Houston Chronicle | Shopping | Classifieds | Obituaries | Place an Ad | La VozRegister | Sign InChron.comWeb Search by YAHOO!Local DirectoryHomeLocalUS & WorldSportsBusinessEntertainmentLifestyleJobsCarsReal EstateSmall Businessby Demand MediaBusiness Technology & Customer Support|Business Communications & Etiquette|Human Resources|Managing Employees|Setting Up a New Business|Advertising & Marketing|Business & Workplace Regulations|Types of Businesses to Start|More »» Business Models & Organizational Structure» Accounting & Bookkeeping» Business Planning & Strategy» Finances & Taxes» Running a Business» Money & DebtSmall Business >Finances & Taxes >ProfitAdvantages & Disadvantages of Profit Maximization by Renee O'Farrell, Demand Media inShare0Share Bit.lyBloggerDeliciousDiggGoogle BookmarkGoogle PlusInstapaperPosterousStumbleuponTumblrYahoo! BookmarkxRSSEmailMaximizing profits as a strategy is fine in the short term, but consequences exist.profit image by Michael Shake from Fotolia.comRelated ArticlesDifference Between Sales Maximization & Profit MaximizationSales Maximization Vs. Profit MaximizationAdvantages and Disadvantages of For-Profit CompaniesRevenue Maximization vs. Profit MaximizationAdvantages & Disadvantages of Retained ProfitThe Advantages & Disadvantages of Economic Order Quantity (EOQ)When a firm applies profit maximization, it is basically saying that its primary focus is on profits, and it will use its resources solely to get the biggest profits possible, regardless of the consequences or the risk involved. Profit maximization is a generally short-term concept. Application usually lasts less than one year, although some companies employ this strategy exclusively, constantly jumping on the next big trend.RiskPursuing a profit maximization strategy comes with the obvious risk that the company may be so entrenched in the singular strategy meant to maximize its profits that it loses everything if the market takes a sudden turn. For example, a company may find that it gets the most profit selling the Wii gaming system, so instead of keeping a balanced inventory, it invests solely in buying Wiis to sell. If the Wii goes out of favor or the makers of the Wii begin to limit the price that can be charged for the system, the company that relied solely on its investment in Wiis could lose everything. Similarly, if a company focuses only on maximizing its profit, it may miss opportunities for investment and expansion. Expectation and GoodwillYou also need to consider consequences of profit maximization. If a company pursues a profit maximization strategy, it creates an environment where price is a premium and cutting costs is a primary goal. This, in turn, creates a perception of the company that could lead to a loss of goodwill with customers and suppliers; for instance, a company may win subsequent contracts with a client by bidding the first job low. It also creates an expectation of shareholders to see immediate gains, rather than realizing profits over time. Cash FlowFor all its drawbacks, profit maximization carries the big advantage of creating cash flow. When maximizing profit is the primary consideration, investments, reinvestments and expansions are typically tabled. The company simply makes do on what it has. This can create a more cost-efficient environment. In the mean time, the profits keep building, producing a healthy bottom line and increasing the firm's amount of available cash. Sometimes profit maximization is used entirely to create an influx of cash so the firm can reduce its debt or save up for expansion. Financing and InvestorsSome degree of profit maximization is always present. The goal of a company is to create profits. It has to profit from its business to stay in business. Moreover, investors and financiers in the company may require a certain level of profits to secure funds for expansion. Further, a company has to perform well for its shareholders; they expect a return on their investments. As such, maximizing that profit is always a consideration to some extent. ReferencesSan Jose State University Department of Economics; Is Profit Maximization the Proper Objective for Firms in a Market Economy?; Thayer WatkinsResourcesBlackwell Publishing; Understanding Financial Management; H. K. Baker and G. E. Powell; 2005About the AuthorRenee O'Farrell is a freelance writer providing valuable tips and advice for people looking for ways to save money, as well as information on how to create, re-purpose and reinvent everyday items. Her articles offer money-saving tips and valuable insight on typically confusing topics. O'Farrell is a member of the National Press Club and holds advanced degrees in business, financial management, psychology and sociology.Photo Creditsprofit image by Michael Shake from Fotolia.comMore ArticlesGraphic Ways to Depict Profit MaximizationThe Advantages & Disadvantages of the Beef Production IndustryLimited Liability Partnership Advantages & DisadvantagesAdvantages & Disadvantages of Using Computer Technology in Decision MakingAlso ViewedHow to Calculate Profit MaximizationThe Difference Between Profit & Revenue MaximizationAdvantages & Disadvantages of a Nonprofit StatusThe Advantages of Profit-Sharing PlansAdvantages and Disadvantages of a Marketing StrategyAdvantages and Disadvantages of StakeholdersRelated TopicsOther Finances & TaxesHow to Claim Taxes When You Open Your Own BusinessTaxes Payable vs. Payroll TaxesKey Tools for Planning FinancesHow to Write Off My Cellphone as a Business Expense on My Tax FormsSmall Business IndexPowered by Demand MediaLocalUS & WorldSportsBusinessEntertainmentLifestyleJobsCarsReal EstateThe Houston Chronicle is the premier local news provider for the country's 4th largest city.Currently the nation's sixth-largest newspaper, the Houston Chronicle is a multimedia company publishing print and online products in English and Spanish that reach millions of people each month. 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