Q 1. Should a company emphasize maximizing shareholder wealth or maximizing profits? Explain.
2. Should ethics and social responsibility play a part in maximizing profits or shareholder wealth?
Profit maximization can be regarded as the financial management’s goal. This has been always the traditional business objective. Profit is the used yardstick in the assessment of the performance and attractiveness of entities of business. On the other hand, maximization of wealth of stockholder is a long-term goal as the interest of stockholder is there in the present profits and in the future. The chief objective is to make sure that market value of ordinary shares of the entities is highest.
