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The shareholder wealth maximization objective states that a business should engage in activities that increase its worth and increase the value of its shareholders.
It is concerned with maximizing the returns to shareholders or increasing the values of stocks held by shareholders.
The wealth maximization objective is typically measured by the market value of a company’s shares.
Shareholder wealth maximization refers to the management’s goal of making financial decisions that increase the value of shares owned by the company’s shareholders.
It is the fundamental objective of financial management that focuses on increasing the overall value of a company, which in turn leads to an increase in the value of its shares.
The wealth maximization objective is considered both appropriate and practical for guiding financial decisions by financial managers.
It provides a clear picture of what financial managers should aim for when making investment and financial decisions.
An important aspect of the wealth maximization objective is maximizing the net present value (or wealth) of a course of action.
The profit-maximization objective refers to the primary goal of businesses to maximize their profits or financial gains within a given period.
It is concerned with maximizing the net monetary income of firms.
Profit-maximization objective may also be defined as the traditional and narrow objective based on obtaining the maximum return possible in terms of profit.
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