The objective of a public company is to maximize its accounting profits because they account for...

The objective of a public company is to maximize its accounting profits because they account for the three aspects of cash flows used in valuation.

Group of answer choices

True

False

Solutions

Expert Solution

FALSE

The objective of a public company is to not to maximize its accounting profits, but to maximize shareholders' wealth.

The shareholders' wealth is defined by the product of the current share price and the total shares outstanding. Accounting profits are not equal to free cash flows. The maximizing the firm's free cash flows, the company can increase value to its shareholders.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

When a company attempts to maximize its profits, subject to its production constraint, it uses _____....

When a company attempts to maximize its profits, subject to its production constraint, it uses _____. a. the unit contribution margin of each product per production constraint b. the unit target cost of each product per production constraint c. the unit selling price of each product per production constraint d. the unit product cost of each product per production constraint

It is often assumed that the goal of the firm is to maximize profits for its...

It is often assumed that the goal of the firm is to maximize profits for its owners, the shareholders. Is the firm’s goal of profit maximization always in society’s best interests? Be sure to defend your answer and cite your sources.

It is often assumed that the goal of the firm is to maximize profits for its...

A perfectly competitive firm seeking to maximize its profits would want to maximize the difference between?

Question 1.A perfectly competitive firm seeking to maximize its profits would want to maximize the difference between?Select one:a. either a or d.b. its marginal revenue and its marginal cost.c. its total revenue and its total cost.d. its average revenue and its average cost.e. its price and its marginal cost.Question text 2.A profit-maximizing monopolist sets?Select one:a. output where demand equals average total cost.b. output where marginal cost equals average revenue.c. output where marginal cost equals marginal revenue.d. the product price where...

A monopoly will maximize its profits and minimize its losses when A. Price of the product...

A monopoly will maximize its profits and minimize its losses when A. Price of the product = the Demand for the Product B. MR=MC C. MC=ATC D. AVC = Marginal Revenue

Please no copy and paste!!! MNEs try to maximize profits. How could MNEs maximize profits and...

Please no copy and paste!!! MNEs try to maximize profits. How could MNEs maximize profits and minimize profit volatility at the same time?

You are hired as a consultant for a fishing company. They wish to maximize profits by...

You are hired as a consultant for a fishing company. They wish to maximize profits by determining the ideal number of workers. The number of fish caught per week is a function of the number of crew on the boat, as follows: Number of Crew Fish Caught per Week (units of 100lbs) 2 3 3 6 4 11 5 19 6 24 7 28 8 31 9 33 10 34 11 34 12 33 The owner tells you that he...

7) In order to maximize profits, the firm should adjust its output level to that point...

7) In order to maximize profits, the firm should adjust its output level to that point at which marginal cost equals average revenue. This statement is true for 1. perfect competition 2. monopoly 3. monopolistic competition 4. oligopoly A) 2 and 3 B) 2, 3, and 4 C) 1 and 3 D) 1 only

What economic condition must a monopoly fulfill in order for it to maximize its profits? Eli...

What economic condition must a monopoly fulfill in order for it to maximize its profits? Eli Lily and Company held a patent on a medical drug it sold to the public. When Lily’s patent expired what would you predict will happen to the price of its product? A price discriminating monopoly charges the lowest price to its customers when they have what type of characteristic? If a government regulatory commission seeks to achieve the most efficient allocation of resources to...

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...

Subjects