GET ANSWERS FOR CHRISTIAN HERITAGE COLLEGE ASSIGNMENTS
The role of financial management is mainly devoted to the task of creating wealth for an organisation’s owners or shareholders.
In Microeconomic theory, profit maximization is usually discussed as a possible goal for the firm. However, focusing on maximizing profit in the short term has pitfalls and financial managers often prefer instead to look beyond simple profit maximization and instead, choose the goal of maximizing shareholder wealth.
Required:
Prepare an essay which compares and contrasts the goal of ‘profit maximization’ with the goal of ‘maximization of shareholder wealth’.
Your essay should firstly clearly define each of these goals, with appropriate discussion and examples.
Then provide a discussion which compares and contrasts both goals, addressing some key problems associated with the use of profit maximization as the goal of the firm and providing suggestions as to how the goal of maximization of shareholder wealth deals with those problems.
