profit maximization &wealth maximization of shareholders.
Explain the rationare for selecting shareholder wealth maximization as the objective of the firm.Include a consideration of profit maximization as an alternative goal
Under what conditions might profit maximization not lead to stock price maximization?"
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.
sales maximization technique is generally used in scale industries where base of the expenses is largelly fixed and where variable costs are limited. on the other hand profit maximization technique are used by variety of industries. total output is higher in sales maximization as compared to profit maximization
profit maximization &wealth maximization of shareholders.
explain how to make the most money (profit) for stock owners of a company. A return on their investment.
The maximization of a shareholder's profit is at a point where the value of share is maximum and dividend on the share paid by the company is also very high but only few successful companies give such profit maximization to their shareholders and the listings of such companies can be found out on activetrader-links.com for investment purposes.
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Explain the rationare for selecting shareholder wealth maximization as the objective of the firm.Include a consideration of profit maximization as an alternative goal
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
The people who become stakeholders of organizations intend to make a profit by doing so. The more profit a company is making, the more money there will be to allocate among each of the stakeholders. Thus, the more a company maximizes profits the more the stakeholders benefit.
A firm cannot survive with mere profit maximization, but must increase long-term security through investment and meeting shareholder expectations. This will increase their productive capacity for the furture as well as encourage the risky capital investment of the shareholders.
Shut
Under what conditions might profit maximization not lead to stock price maximization?"
Not necessarily
The arguments in favor of wealth maximization as the objective of a firm are that it aligns the interests of shareholders and management, promotes long-term sustainability, and encourages efficient allocation of resources. Profit maximization, on the other hand, may lead to short-term thinking, unethical practices, and neglect of other stakeholders' interests. By focusing on wealth maximization, firms can generate sustained value for shareholders and society as a whole.