Is profit maximization alone an appropriate goal for the firm? Why or why not? Who in a corporation is responsible for protecting and managing stockholders interest? How is profit maximization different from maximizing shareholder wealth?
No profit maximization alone is not an appropriate goal for the firm. The profit maximization has certain pitfalls as a criterion, which are as follows:
It is Vague
It Ignores the Timing of Returns
It ...
Solution Summary
This brief solution looks at the weaknesses of profit maximization for usage in a firm's goal and explains the key difference between profit maximization and shareholder wealth. Reference used is included.
... done a better job of maximizing profits as compared ... achieving the greatest profit maximization also achieve the greatest stockholder wealth maximization...
... firm having a higher return on stockholders' equity than ...Profit maximization can sometimes be an improper goal because ... may seek to maximize its profits at the ...
... owned firm interested in serving its stockholders should be to. Maximize expected total corporate profit. ... This will lead to shareholder's wealth maximization. ...
... suggested that maybe it was profit that was ... affect stock price and thus, shareholder wealth maximization. ... firm's owners despite its negative effect on profits? ...
... The goal of maximization of profits is considered ... Hence profit maximization is not considered as the ultimate ... Wealth maximization is considered to be the most ...
... on increasing the size of the firm and maximizing current profits. ... two main agency relationships: managers and creditors and managers and stockholders. ...
... C) maximizing wealth. ... measures the overall effectiveness of management in generating profits with its ... A) net profit margin B) price/earnings ratio C) return on ...
... The goal of Maximization of profits is considered ... "Evidently when profit maximization becomes the ... has to consider not only the wealth maximization as discussed ...
