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    lad2005's Avatar
    lad2005 Posts: 2, Reputation: 1
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    #1

    May 6, 2006, 02:20 PM
    Question about finace management
    Sir,
    Be please to share what is Profit Maximaization and Wealth Maximization and how they differ from each other.
    Thanking You
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    May 7, 2006, 01:33 PM
    Shareholder wealth is the market value of the firm's common stock. Shareholder wealth is calculated as the number of common shares outstanding times the market price per share (the price at which the firm's common stock trades for in the marketplace such as the New York Stock Exchange).

    Profit maximization typically is defined as a more static concept than shareholder wealth maximization. The profit maximization objective does not normally consider the time dimension or the risk dimension in the measurement of profits. Additionally, the definition of profit is ambiguous and subject to accounting manipulation. In contrast, the shareholder wealth maximization objective provides a convenient framework for evaluating both the timing and the risks associated with various investment and financing strategies and relies on cash flows as a measure of returns

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