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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 .
Profit maximization is pretty much just maximizing how much money you earn.
It will not necessarily affect how much wealth you gain.
Wealth maximization affects how much money you have total.
It will not necessarily affect how much you earn.
I'm going to bet some instructor made this point in class, and it's been a long time since I've been in class. But profit maximazation in my day was planning and making decisions in the Long RUN best interests of the company.
Wealth maximazation sounds more like maximizing the weal;th of the owners. But if the company is worth more than the owners' interests are correspondingly worth more and the owners are wealthier. But this wealth (money spent on new plant and equipment,) might be illiquid so, I guess you could say the company is richer but the owners are not $10,000.00 richer because a $10,000.00 in equipment is worth less if sold on the open market would be worth less, like a new car is worth less as soon as you drive it off the lot.
Suggested by someonew who didn't go to the class either.
well ... wealth maximizations is differ from profit maximization...in many ways ... and also can meet each other in various aspects .
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 .
the two meet each other in the point of how to maximize the shareholders wealth .
value maximization consist of the total return enhanced from previous return in terms of amount but wealth is something added to the total value in terms of amount.
profit maximization
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What are the similarities between profit maximisation objectives and wealth maximisation objectives?
Both profit maximization and wealth maximization have the objective of increasing the net worth.
Which is more comprehensive objective profit maximization or shareholder wealth maximization?
If the company is public listed (trades in the stock market) their aim is shareholder wealth maximization whereas for a privately owned firm a profit maximization objective is appropriate.
Maximization of shareholder wealth as a goal is superior to profit maximization because?
it is operating cost
What is the difference between profit maximization and wealth maximization?
Shareholder wealth (more commonly referred to as shareholder value) is talking about the value of the company generally expressed in the value of the stock. Profit maximization refers to how much dollar profit the company makes.
Why is that profit maximization may not necessary lead to wealth maximization?
Because as the price of a commodity increases, the purchasing power of consumers reduces. Consumers will then shy away and only few people would be able to pay for the extra. Thus, increase in profit may not necessarily mean maximization of wealth.
Are wealth maximization and profit maximization related?
Not necessarily
Advantages of profit maximization?
Profit maximization increase the graph of outputs.
Shareholder wealth maximization is considered to be a more appropriate goal for the firm than profit maximization because?
Shareholder wealth maximization is considered to be a more appropriate goal for the firm than profit maximization
Is wealth maximization superior to profit?
yes
What are the similarities between profit maximisation objectives and wealth maximisation objectives?
Both profit maximization and wealth maximization have the objective of increasing the net worth.
What is Three basic reasons is profit maximization inconsistent with wealth maximization?
Profit maximization is a narrow view which accounts for only the difference between sales and costs Wealth Maximization is broader and more philosophical in approach. Wealth maximisation includes not exhaustively culture , synergy, value, potential and wealth
Which is more comprehensive objective profit maximization or shareholder wealth maximization?
If the company is public listed (trades in the stock market) their aim is shareholder wealth maximization whereas for a privately owned firm a profit maximization objective is appropriate.
Maximization of shareholder wealth as a goal is superior to profit maximization because?
it is operating cost
What are the basic objectives of financial management?
The objective of financial management is wealth maximization rather than profit maximization. Wealth maximization means the total value of the firm.
What is the difference between profit maximization and wealth maximization?
Shareholder wealth (more commonly referred to as shareholder value) is talking about the value of the company generally expressed in the value of the stock. Profit maximization refers to how much dollar profit the company makes.
Can there be difference between profit maximization and shareholders wealth maximization?
Profit maximization is short term as compare to share holder's wealth maximization, Managers should focus on Share holder's wealth maximization because its what they are hired for. also there are sevseal reasons such as.... 1) the share holders wealth is be considered.. 2)profit maximization doesnt say which type of profit it should maximize-short term or long term 3)profit maximization ignores the social values but only aims at earning maximum profit. 4)wealth maximization also considers improving the goodwill of the organization
Profit maximization vsealth maximization in financial management of an organization?
Profit maximization is also about increasing the EPS (earning per share) of the shareholders and to maximise the net present worth. Main objective of co is profit maximization EPS: net profit/ no of shares outstanding. Wealth maximization is anything having value. Anything which can be expressed in money value or economic value which is considered as wealth. Baisc objective of a co is wealth maximization. How to increase the wealth: By producing a quality product at a competitive rate. By giving product at reasonable price. Good after sales service. this all things leads to increase in co's wealth.
