Question

Wealth maximization is superior to profit maximization as the goal of financial management because:?

Wealth maximization is superior to profit maximization as the goal of financial management because:
a) profits do not represent cash flow
b) profits ignore the timing of returns
c) profit maximization disregards risk
d) all of the above.

5 years ago - 1 answers

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e. Profit is whatever is leftover when everything is paid off. If invested in safe investment vehicles it can earn extra money, but some should always be left out for unexpected emergencies and repairs. Wealth, on the other hand, is more an individual achievement and must be used wisely to avoid debt. Purchases and investments should be made wisely so wealth can be an ongoing resource. :o)

5 years ago