8
* Why should a financial manager concentrate primarily on wealth maximization
instead of profit maximization as a goal of the corporation? Explain logically?
(2010, 2008):
Wealth
maximization's are considered as a better approach the profit maximization
because Wealth maximization's objective’s is a widely recognized criterion with
which the performance a business enterprise is evaluated. It has also some
advantage such as
1.
Wealth maximization's is a clear term. Here the present value of cash flow is
taken into consideration. The net effect of investment and benefits can be
measured clearly.(Quantitatively)
2.
The present values of cash inflow and outflows helps the management to achieve
the overall objectives of a company.
