Profit maximisation and wealth maximization
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Explain why profit maximisation fails to be consistent with wealth maximisation. Include reasons why profit maximsation and/or wealth maximisation or may not be appropriatte corporate goals in your explanation.
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This discusses whether the profit maximisation fails to be consistent with wealth maximisation
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Explain why profit maximisation fails to be consistent with wealth maximisation. Include reasons why profit maximsation and/or wealth maximisation or may not be appropriatte corporate goals in your explanation.
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Profit maximization should not be the decision criterion of the management. Instead it should be wealth maximization, which is based on the maximization of cash flows. Cash flows are more important to business as it leads to wealth maximization. The profit maximization has certain pitfalls as a criterion, which are as follows:
• It is Vague
• It Ignores the Timing of Returns
• It Ignores Risk
Moreover, in new business environment profit maximization is regarded as ...
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