What are the Arguments for profit maximization?
Favourable Arguments for Profit Maximization (i) Main aim is earning profit. (ii) Profit is the parameter of the business operation. (iii) Profit reduces risk of the business concern. (iv) Profit is the main source of finance.
What are the Arguments against profit maximization?
Unfavourable Arguments for Profit Maximization The following important points are against the objectives of profit maximization: (i) Profit maximization leads to exploitation of workers and consumers. (ii) Profit maximization creates immoral practices such as corrupt practice, unfair trade practice, etc.
What are the Arguments against profit maximization as the objective of business firm?
Unfavourable Arguments for Profit Maximization i) May leads to exploiting workers and consumers; ii) Creates immoral practices such as corrupt practice, unfair trade practice, etc; iii) This objective leads to inequalities among the stakeholders such as customers, suppliers, public shareholders, etc.
What are the Arguments in Favour of wealth Maximisation goal?
Favorable Arguments for Wealth Maximization It provides extract value of the business concern. (iii) Wealth maximization considers both time and risk of the business concern. (iv) Wealth maximization provides efficient allocation of resources. (v) It ensures the economic interest of the society.
Which of these is an argument in Favour of wealth maximization goal of financial management?
Favorable Arguments for Wealth Maximization: (i) It considers maximizing the stockholder wealth instead of profit of the firm. (ii) It considers the time value of money. (iii) It considers the risk of the business concern. (iv) It provides efficient allocation of resources.
What is profit maximization and wealth maximization?
Wealth Maximization consists of a set of activities that manage the financial resources intending to increase the value of the stakeholders, whereas, Profit Maximization consists of the activities that manage the financial resources intending to increase the profitability of the company.
What are the criticisms objections to wealth Maximisation objective?
(iii) The critics of profit maximization objective argue that it ignores the risk associated with a stream of the cash flow of the project. For example, the total profit from the two projects may be the same but the profit from one project may be fluctuating widely than the profit from the other project.
Is profit maximization the only objective of business Why?
The answer will be Profit maximization and earning is not the sole objective of business. A business which is mainly motivated for the making of money seldom grow well in the long run and never commands respect in the society.
Which of the following is unfavorable argument for wealth Maximisation?
Unfavorable Arguments for Wealth Maximization (i) Wealth maximization leads to prescriptive idea of the business concern but it may not be suitable to present day business activities. (ii) Wealth maximization is nothing, it is also profit maximization, it is the indirect name of the profit maximization.
Why is wealth Maximisation considered a better objective of financial management as compared to profit Maximisation?
It should be clear that profit maximisation is a strictly short-term approach to managing a business, which can be damaging over the long term. On the other hand, Wealth maximisation, which focuses attention on the long term, increases the value of the business and eventually pays-off better.
What is meant by wealth maximization and profit maximization?
What is profit maximization with example?
One of the most popular methods to maximize profit is to reduce the cost of goods sold while maintaining the same sales prices. Examples of profit maximizations like this include: Find cheaper raw materials than those currently used. Find a supplier that offers better rates for inventory purchases.