The document compares two company objectives: maximizing profit and maximizing shareholder wealth. Maximizing profit focuses on increasing the bottom line profit number through cost reductions and sales increases in the short term, without consideration for risk or when the profits are realized. Maximizing shareholder wealth emphasizes long term growth through increasing income, dividends, and share price to boost the value of shares owned by investors. It stresses assessing risk in investments and ties profitability to increased cash flow over time.

1. Different Company Objective
a) Maximizing Profit
b) Maximizing Shareholder Wealth

2. Objective
Maximize Profit
1. Profit
• A result of after
reduced – cost and
expenditure.
Maximize Shareholder Wealth
1. The wealth/riches of
shareholder
• The value of ordinary
stock market held by
the share holders.

3. Objective
Maximize Profit
2. Achievable in short term
• Can manipulate the
sale and cost.
Maximize Shareholder Wealth
2. The firm ought to meet
the short term objective
and stresses on long term
objective.
• E.g: should have income
growth, dividend, profit
increment, then only the
share price will rise up.

4. Objective
Maximize Profit
3. Stresses on the amount of
profit gained and not
when is it gained. (the time
the return is gained)
4. Disregard the risk and
uncertainty involved in
any investment
Maximize Shareholder Wealth
3. Stresses on the principle of
current financial value
4. Decision is made after
assessing the risk involved
in any investment

5. Objective
Maximize Profit
5. Profit increment is not
necessarily in cash flow.
• This is because the profit
calculation involves item
and not cash.
• E.g: expenditure on
reduced value and
settlement
Maximize Shareholder Wealth
5. The profit rate of the
share holders is closely
related with the increment
cash flow
• The increment of cash
flow may take place
before the dividend to be
delegated.

6. THANK YOU
THE END….