The assumed financial objective of a company is to:
A)maximise profits.
B)minimise costs.
C)maximise revenue.
D)maximise shareholders' wealth.

Question

Quizplus · Accepted Answer

The primary financial objective of most companies is to maximize shareholders' wealth or shareholder value. This means that the company aims to increase the value of its stock price, which benefits its shareholders. Maximizing profits, minimizing costs, and maximizing revenue are all important goals, but they are secondary to the overarching goal of increasing shareholder value. Maximizing profits or minimizing costs, for example, could lead to short-term gains but could ultimately hurt the company's long-term prospects if it means sacrificing investments in research and development, marketing, or employee training. Maximizing revenue is also important, but it may not necessarily translate to higher profits if costs are too high.

The Assumed Financial Objective of a Company Is To