The primary financial goal of the business firm is to maximize the wealth of the firm's...

The primary financial goal of the business firm is to maximize the wealth of the firm's owners. Wealth, in turn, refers to value. If a group of people owns a business firm, the contribution that firm makes to that group's wealth is determined by the market value of that firm.
Are you agree? yes or no ? why?

Expert Solution

I agree with the statement. The goal and of financial management is to maximize the value of the firm. This value is determined by the market value of the shares held by the owners who are the shareholders. A point of distinction here is between value and profits. Maximizing profits of the firm does not guarantee increase in the value since the management can take unethical decisions which will increase the profits but will result in long-term losses and loss of goodwill. This will have an impact on the value of the firm. Hence value is determined by the market value of the firm.

jeff jeffy answered 2 years ago

The primary goal of the business firm is to maximize the wealth of the firm's owners.

"The primary goal of the business firm is to maximize the wealth of the firm's owners." For a corporation, this statement means that managers should focus on maximizing the wealth of its shareholders or its: net income minimize the risk stock price sales revenue

the primary goal of financial managers is to maximize the wealth of the owners.

the primary goal of financial managers is to maximize the wealth of the owners. Do u fully agree or disagree with this statement

The primary goal of the financial manager of a firm is to: A) maximize operating income...

The primary goal of the financial manager of a firm is to: A) maximize operating income B) Generate growing sales C) Maximize the book value of the company D) maximize the market value of the shareholders' investment in the company E) Increase profit margins

the primary goal of financial management of a firm is to maximize its stock price in...

the primary goal of financial management of a firm is to maximize its stock price in the short run. Improving ROE( return on equity) is usually translated into greater stock price. The question is how to improve ROE. Much research agrees that high ROE depends on good liquidity,__________ proper use of debt.

In finance theory, the goal of the firm is said to be “maximize wealth” instead of “maximize profit.”

In finance theory, the goal of the firm is said to be “maximize wealth” instead of “maximize profit.” Define shareholder wealth. How would one measure shareholder wealth? Briefly discuss two limitations of “profit maximization” as a goal for the firm.

The goal of the firm is? Maximize Retained Earnings Minimize Risk Maximize Shareholders wealth Maximize Net...

The goal of the firm is? Maximize Retained Earnings Minimize Risk Maximize Shareholders wealth Maximize Net income

Cantelevellers plc’s primary financial objective is to maximize the wealth of its shareholders. The business specializes...

Cantelevellers plc’s primary financial objective is to maximize the wealth of its shareholders. The business specializes in the development and assembly of high quality television sets. It normally subcontracts manufacture of the components of each set, carrying out the final assembly itself. Recently the business has developed a new TV set that has been named Flatview and a decision now needs to be taken as to whether to take it into production. The following data are available: If the decision...

Remember that the primary goal of a firm is to maximizeshareholder wealth by increasing the...

Remember that the primary goal of a firm is to maximize shareholder wealth by increasing the firm’s intrinsic value. It is thus important to understand the impact of distributions—both in the form of dividends or stock repurchases—on the firm’s value. Consider the following situation: Kathy is a financial analyst in BTR Warehousing. As part of her analysis of the annual distribution policy and its impact on the firm’s value, she makes the following calculations and observations: • The company generated...

The goal of international financial management is to maximize shareholders' wealth, same as that of financial management.

The goal of international financial management is to maximize shareholders' wealth, same as that of financial management. Then what are the four factors/topics that make international finance separate or special?

"The goal of financial management is to take actions which maximize the value of a firm's...

"The goal of financial management is to take actions which maximize the value of a firm's stock. Those actions will eventually appear in the firm's financial statement, so a general understanding of financial statements is very important for the manager." Given the recent failure of many financial institutions, do you believe business leaders really understand and use all of the concepts and principles we teach in accounting, finance, and economics? In addition, do you believe financial managers are truly concerned...

Question