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.
Related Q&A：
Is profit maximization the best objective？Well, you know, it's not that simple to say that profit maximization is always the best objective. While making a lot of money is important for a business to survive and grow, it can't be the only thing. Sometimes, focusing solely on maximizing profits might lead to cutting corners on quality or not caring enough about employees and customers. That could hurt the business in the long run. Also, companies have a responsibility to the community and the environment. So, it's a balance. It's not just about the money; it's about doing the right thing and having a sustainable business model.
