Profit maximization - objectives of business entity, Finance Basics

Profit maximization - Objectives of Business Entity

Conventionally, this was considered to be the main goal of the firm. Profit maximization refers to getting the highest possible profits throughout the year.  This would be achieved via either increasing sales revenue or via reducing expenses.  Notice as:

Profit = Revenue - Expenses

The sales revenue can be increased through either volume selling price or the increasing the sales. However it should be differentiated, such maximizing sales revenue may on the same time effect to increasing the firm's expenses. However the pricing mechanism will, assist the firm to determine such goods and services to give so as to maximize profits of the firm.

The profit maximization goal has been criticized since of the following like:

  • It avoids time value of money
  • It avoiders uncertainties and risk
  • It is vague
  • It ignores another participant in the firm quite than shareholders.
Posted Date: 1/29/2013 1:15:13 AM | Location : United States







Related Discussions:- Profit maximization - objectives of business entity, Assignment Help, Ask Question on Profit maximization - objectives of business entity, Get Answer, Expert's Help, Profit maximization - objectives of business entity Discussions

Write discussion on Profit maximization - objectives of business entity
Your posts are moderated
Related Questions
How quickly could something like this be done? And how confidential is this? Has any student ever been caught using this service?

Dividend Basis Valuation Ownership of shares in entities - The owner to obtain a cash flow consisting of future dividends and the value of a share must correspond to the recen

Explain the term - Underwriting Underwriting is an agreement whereby underwriter promises to subscribe to a specified number of debentures or shares or a specified amount of

Marbela Corporation's stock had a required return of 12.75% last year, when the risk-free rate was 6.4% and the market risk premium was 5.5%.  Now suppose the market risk premium d

Blue Chips and Going Short or Long on Share - Stock Market Blue Chips Are first class securities of firms that have sound share capital and are internationally

Important Points for Shareholders and Creditors 1. In raising capital, the borrowing firm will constantly question the financial securities in form of preference shares

how can debentures be explained in class in term of game, role play etc....?

Characteristics of Investment - Venture Capitalists Venture capitalists, will just invest in a company whether there is a reasonable chance such the company will be successful

Define the term Placement - Methods of Floating New Issues Under this method, issue houses or brokers purchase the securities outright with the intention of placing them wi

The financial data is of little value in its raw form. However, the same may be analyzed and be put in the form more meaningful to the recipients. This is normally done by using va