Profit maximization-objectives of a business entity, Financial Management

Assignment Help:

Profit maximization

Traditionally, this was considered to be the major goal of the firm. Profit maximization refers to attaining the maximum possible profits throughout the year. This could be attained by either raising sales revenue or by decreasing expenses.

Profit = Revenue – Expenses

The sales revenue can be raised by either raising the sales volume or the selling price. It must be noted however, that maximizing sales revenue may at the same time result to increasing the firm's expenses.

The pricing mechanism will though, help the firm to establish which goods and services to offer so as to maximize profits of the firm.

The profit maximization aim has been condemn since of the following reasons:

(a) It ignores time value of money
(b) It ignores risk and uncertainties
(c) It is vague
(d) It avoids other participants in the firm instead of the shareholders


Related Discussions:- Profit maximization-objectives of a business entity

Partnership, Par tnership A legally authorized business form in wh...

Par tnership A legally authorized business form in which two or more partners are co-owners, sharing profits, losses, and liabilities related with the business they own.

#fintitle..515, Hi can someone help me with my assignment also understand i...

Hi can someone help me with my assignment also understand it in order for me to do the voice thread and answer all questions that might confront me.

How are financial trades made on an organized exchange, How are financial t...

How are financial trades made on an organized exchange? Every exchange-listed security is traded at a precise location on the trading floor called the post. The trading is mana

Discuss the advantages and disadvantages of gold standard, Discuss the adva...

Discuss the advantages and disadvantages of the gold standard. Answer:  The benefits of the gold standard include: (I) as the supply of gold is restricted, countries cannot compr

Financial decision, Should a company pursue price hike or focus on increasi...

Should a company pursue price hike or focus on increasing sales volume

Describe the types of financial ratios, 1. Describe the types of financial ...

1. Describe the types of financial ratios and other financial performance measures that are used during a venture's successful life cycle. Who are the users of financial performan

Define the common pattern of cash flows, What is the common pattern of cash...

What is the common pattern of cash flows for a share of preferred stock? How does the market define the value of a share of preferred stock, specified these promised cash flows?

Analysis on the stocks, Yellow: is the company which their stock performanc...

Yellow: is the company which their stock performance was forecasted by analyst Blue: is the name of the company which made the recommendation by the analyst who work for it R

Define measures that propose to prevent the recurrence, In an integrated wo...

In an integrated world financial market, a financial crisis in a country can be rapidly transmitted to other countries, causing a global crisis. What kind of measures would you pro

How can we estimate that firm is going to benefit, Ho can we estimate that ...

Ho can we estimate that firm is going to benefit from projec To calculate how firm is going to benefit from project we need to calculate whether firm is earning the required ra

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd