Profit maximization, maximization of shareholder wealth?
Why is profit maximization, by itself, an inappropriate goal? What is meant by the goal of maximization of shareholder wealth?
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Profit maximization by itself is not appropriate because the goal could overtake other aspects of the company which are important. also other elements of the company could be sacrificed if the company only cares about profit.
For example the company could try to reduce costs by buying cheaper goods. The value and quality of the goods produced would be then reduced, rendering customers unsatisfied. ...
Solution Summary
Why is profit maximization, by itself, an inappropriate goal? What is meant by the goal of maximization of shareholder wealth?
...Profit maximization goal ignores risk and timing of cash ... title to assets and profits Unlimited liability ...Shareholder's liability is restricted to the amount of ...
... firm has higher profits, but total profit is 10 ...share-holder value, rather than profits, since investors are ...Shareholder value maximization is probably a better ...
... In analyzing shareholder wealth one should not just look at the profits it is ... that creating the best value in the process of profit maximization will give ...
... capitalization by the company's shareholder's equity ... ha done a better job of maximizing profits? ... company achieving the greatest profit maximization also achieve ...
... balance sheets and than could easily increase profits. But this short run profit taking strategy is ...Maximization of Shareholders Wealth means maximization of ...
... strategy has provided greater shareholder wealth creation? ... has done a better job of maximizing profits? ... achieving the greatest profit maximization also achieve ...
...Wealth maximization is achieved by maximization of the ... is a better yardstick than the profits. There are several objections against the profit maximization: ...
... maximize shareholder's wealth by maximizing the company's profit. As the company has more profits, it can decide whether it will give it back to shareholders...
... Moreover profits do not take care of time ... Also profit maximization focus on short term profitability ... financial management is concerned with value maximization. ...
