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    The goal of finance

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    The goal of finance is to maximize shareholder wealth, not to maximize profit. Can anyone tell me why these two goals are different, and why one is preferred over the other?

    © BrainMass Inc. brainmass.com October 9, 2019, 7:02 pm ad1c9bdddf
    https://brainmass.com/business/finance/goal-finance-105790

    Solution Preview

    The major difference between the profit maximization goal and the goal of shareholder wealth maximization is that the latter goal deals with all the complexities of the operating environment, while the profit maximization goal does not. The major factors assumed away by the profit maximization goal are uncertainty and the timing of the returns.

    The goal of shareholder ...

    Solution Summary

    This solution discusses the differences and reasons for preference for maximum shareholder wealth vs. maximizing profit.

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