radhatanaya

Define profit maximization?

"Hi all, need help!!!!!! What are the disadvantages of profit maximization and stockholder wealth maximization as the goals of the firm?"
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dylanx
"Throughout financial aspects, profit maximation is the short run or maybe end method by which a firm can determine the value along with output levels that comes back the highest revenue. There are lots of strategies to this problem. The total profit–overall cost view relies on the truth that gain means revenue less price and also targets on maximising this particular dispute, and the minimal profits–marginal cost viewpoint will be based upon the belief that complete revenue grows to its maximal distributor point where by marginal profit equals marginal cost. "
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tiuw
Emphasis the outcome,ignores risk,ignoring the timing of returns,ignore the stock holders return.....and offers no clear link between financial decisions and stock price.........can lead to management anxiety and frustration
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