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Profit maximisation criterion
Profit maximisation criterion is unsuitable and inappropriate as an operational objective of financing, investment and dividend decisions of a firm. It isn't only vague and time value of money. It follows from the above that a suitable operational decision criterion for financial management should
(i) be exact andprecise,
(ii) be based on "bigger the better" principal,
(iii) consider both quantity and quantity dimensions of benefits
(iv) recognise the time value of money. Alternative to profit maximisation that is wealth maximisation is one such measure.
The financial ratios of a firm are given: Current ratio = 1.33 Acid-test ratio = 0.80 Current liabilities = 40,000 Inventory turnover ratio = 6 What is the
At the end of 1922, your great grandfather (g.g.f.) established a trust fund to be used in order to help a later generation of the family obtain a university education. The ultimat
a) Year 2 ROCE = $400k / $1,000k = 40% Year 1 ROCE = $360k / $800k = 45% b) ROCE is an efficiency ratio that measures the monetary performance of a firm compared with the amo
Q. What do you mean by Wealth Maximization? This is also known as value maximization or net present worth maximization approach, it takes into consideration the time value of m
assume that risk free rate is 8% and expected rate of return in market is 12%. what is the required rate of return on stock with a beta of 0.8%
What are financial markets? Why do they exist? Ans: Financial markets are in which financial securities are bought and sold. They be present primarily to bring deficit economi
Q. Merits of net present value method? Merits of NPV method:- (i) Time value of funds is taken into consideration: - For the reason that this method takes into account the t
calculation math
Problem: 1.1 Clearly explain the costs and benefits of being a small and remote island or a ministate economy. 1.2 Over the years, the role of government has been defined al
If invested 2500 in a bank that pays 1% annually. How long will it take for the funds to double?
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