A firm's net income is the most appropriate measure to determine whether the management is maximizing the firm's stock price.

Question

Quizplus · Accepted Answer

Net income is just one aspect of a company's financial performance and does not necessarily indicate whether management is maximizing the firm's stock price. Other factors such as revenue growth, profit margins, return on assets and debts, and market share are also important in determining stock price. Additionally, management may prioritize short-term profits over long-term growth, which may not benefit the firm's stock price in the long run. Therefore, it is not accurate to solely rely on net income to determine whether management is maximizing the firm's stock price.

A Firm's Net Income Is the Most Appropriate Measure to Determine