Manpreet Kaur discusses the differences between profit maximization and wealth maximization as objectives for financial management. [1] Profit maximization aims to increase earnings and is a short-term approach, but it can exploit workers and consumers. [2] Wealth maximization seeks to increase long-term shareholder value by maximizing the current stock price, balancing the interests of various stakeholders. [3] While both have drawbacks, wealth maximization is generally considered a more appropriate objective as it considers the time value of money and risk over the long run.
A simple and comprehensive presentation on Profit maximization v/s Wealth Maximization.
By Arvinder Pal Kaur
Faculty of Management
Northwest Group of Institutions
Dhudhike, MOGA
The capital which is needed for the regular operation of business is called working capital. 1- for the purchase of raw materials
2- for the payment of wages
3- payment of rent and of other expenses
Working capital is kept in the form of cash, debtors, raw materials inventory, stock of finished goods, bills receivable etc.
Size Of Business
Nature Of Business
Storage Period
Credit Period
Seasonal Requirement
Potential Growth Or Expansion Of Business
Changes In Price Level
Dividend Policy
Working Capital Cycle
Operating Efficiency
Other Factors
Working capital requirement of a firm is directly influenced by the size of its business operation.
Big business organizations require more working capital than the small business organization.
Working capital requirement depends also upon the nature of business carried by the firm. Normally, manufacturing industries and trading organizations need more working capital than in the service business organizations.
A service sector does not require any amount of stock of goods. But in the manufacturing or trading firm, credit sales and advance related transactions are in large amount.
Time needed for keeping the stock in store is called storage period. The amount of working capital is influenced by the storage period. If storage period is high A firm should keep more quantity of goods in store and hence requires more working capital. if the storage Period is less , then more stock of goods must be held in store as work-in-progress.
A simple and comprehensive presentation on Profit maximization v/s Wealth Maximization.
By Arvinder Pal Kaur
Faculty of Management
Northwest Group of Institutions
Dhudhike, MOGA
The capital which is needed for the regular operation of business is called working capital. 1- for the purchase of raw materials
2- for the payment of wages
3- payment of rent and of other expenses
Working capital is kept in the form of cash, debtors, raw materials inventory, stock of finished goods, bills receivable etc.
Size Of Business
Nature Of Business
Storage Period
Credit Period
Seasonal Requirement
Potential Growth Or Expansion Of Business
Changes In Price Level
Dividend Policy
Working Capital Cycle
Operating Efficiency
Other Factors
Working capital requirement of a firm is directly influenced by the size of its business operation.
Big business organizations require more working capital than the small business organization.
Working capital requirement depends also upon the nature of business carried by the firm. Normally, manufacturing industries and trading organizations need more working capital than in the service business organizations.
A service sector does not require any amount of stock of goods. But in the manufacturing or trading firm, credit sales and advance related transactions are in large amount.
Time needed for keeping the stock in store is called storage period. The amount of working capital is influenced by the storage period. If storage period is high A firm should keep more quantity of goods in store and hence requires more working capital. if the storage Period is less , then more stock of goods must be held in store as work-in-progress.
This presentation is made by Toran Lal Verma. Meaning, nature, and scope of Financial Management are discussed. scope and objectives of financial management have been discussed along with merits and demerits.
The Concept
A stable strategy arises out of a basic perception by the management that the firm should concentrate on using its present resources for developing its competitive strength in particular market areas.
In simple words, stability strategy refers to the company’s policy of continuing the same business and with the same objectives
A firm pursues stability strategy when
1. It continues to serve the public in the same product or service, market, and function sectors as defined in its business definition.
2. Its main strategic decisions focus on incremental improvement of functional performance.
2. Corporate Restructuring is the process of redesigning one or more aspects of a company.
3. The process of reorganizing a company may be implemented due to a number of different factors, such as positioning the company to be more competitive, surviving a currently adverse economic climate, or acting on the self confidence of the corporation to move in an entirely new direction.
This presentation is made by Toran Lal Verma. Meaning, nature, and scope of Financial Management are discussed. scope and objectives of financial management have been discussed along with merits and demerits.
The Concept
A stable strategy arises out of a basic perception by the management that the firm should concentrate on using its present resources for developing its competitive strength in particular market areas.
In simple words, stability strategy refers to the company’s policy of continuing the same business and with the same objectives
A firm pursues stability strategy when
1. It continues to serve the public in the same product or service, market, and function sectors as defined in its business definition.
2. Its main strategic decisions focus on incremental improvement of functional performance.
2. Corporate Restructuring is the process of redesigning one or more aspects of a company.
3. The process of reorganizing a company may be implemented due to a number of different factors, such as positioning the company to be more competitive, surviving a currently adverse economic climate, or acting on the self confidence of the corporation to move in an entirely new direction.
Chapter 1 Introduction to Financial ManagementSafeer Raza
Chapter 1 of Financial Management by Van horn
Introduction to Financial management
Topics
Introduction
What is Financial Management
Investment Decision
Financing decision
Asset management Decision
Goal of the firm
Value creation or profit maximization
wealth maximization
Agency problems
Corporate Social Responsibility
Corporate governance
Organization of the financial management function
Business Finance: Introduction to Business Finance, Meaning and Definition of Financial Management, Objectives of Financial Management- (Profit Maximization and Wealth Maximization), Modern Approach to Financial Management- (Investment Decision, Financing Decision, Dividend Policy Decision), Finance and its relation with other disciplines, Functions of Finance Manager
FINANCIAL MANAGEMENT, ROLE OF FINANCIAL MANAGEMENT, IMPORTANCE OF FINANCIAL MANAGEMENT, FEATURES OF FINANCIAL MANAGEMENT, SCOPE OF FINANCIAL MANAGEMENT, FUTURE OF FINANCIAL MANAGEMENT, etc.
Financial Management - Chapter 1 ( B.COM BU IV semester ) Chaitra Mandara
Introduction to Financial Management,meaning , definition, profit and wealth maximization, significance, financing decision and investment decision, dividend decision,financial planning, duties of controller and treasurer.
Instructions for Submissions thorugh G- Classroom.pptxJheel Barad
This presentation provides a briefing on how to upload submissions and documents in Google Classroom. It was prepared as part of an orientation for new Sainik School in-service teacher trainees. As a training officer, my goal is to ensure that you are comfortable and proficient with this essential tool for managing assignments and fostering student engagement.
The Roman Empire A Historical Colossus.pdfkaushalkr1407
The Roman Empire, a vast and enduring power, stands as one of history's most remarkable civilizations, leaving an indelible imprint on the world. It emerged from the Roman Republic, transitioning into an imperial powerhouse under the leadership of Augustus Caesar in 27 BCE. This transformation marked the beginning of an era defined by unprecedented territorial expansion, architectural marvels, and profound cultural influence.
The empire's roots lie in the city of Rome, founded, according to legend, by Romulus in 753 BCE. Over centuries, Rome evolved from a small settlement to a formidable republic, characterized by a complex political system with elected officials and checks on power. However, internal strife, class conflicts, and military ambitions paved the way for the end of the Republic. Julius Caesar’s dictatorship and subsequent assassination in 44 BCE created a power vacuum, leading to a civil war. Octavian, later Augustus, emerged victorious, heralding the Roman Empire’s birth.
Under Augustus, the empire experienced the Pax Romana, a 200-year period of relative peace and stability. Augustus reformed the military, established efficient administrative systems, and initiated grand construction projects. The empire's borders expanded, encompassing territories from Britain to Egypt and from Spain to the Euphrates. Roman legions, renowned for their discipline and engineering prowess, secured and maintained these vast territories, building roads, fortifications, and cities that facilitated control and integration.
The Roman Empire’s society was hierarchical, with a rigid class system. At the top were the patricians, wealthy elites who held significant political power. Below them were the plebeians, free citizens with limited political influence, and the vast numbers of slaves who formed the backbone of the economy. The family unit was central, governed by the paterfamilias, the male head who held absolute authority.
Culturally, the Romans were eclectic, absorbing and adapting elements from the civilizations they encountered, particularly the Greeks. Roman art, literature, and philosophy reflected this synthesis, creating a rich cultural tapestry. Latin, the Roman language, became the lingua franca of the Western world, influencing numerous modern languages.
Roman architecture and engineering achievements were monumental. They perfected the arch, vault, and dome, constructing enduring structures like the Colosseum, Pantheon, and aqueducts. These engineering marvels not only showcased Roman ingenuity but also served practical purposes, from public entertainment to water supply.
Embracing GenAI - A Strategic ImperativePeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
Introduction to AI for Nonprofits with Tapp NetworkTechSoup
Dive into the world of AI! Experts Jon Hill and Tareq Monaur will guide you through AI's role in enhancing nonprofit websites and basic marketing strategies, making it easy to understand and apply.
A Strategic Approach: GenAI in EducationPeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
Macroeconomics- Movie Location
This will be used as part of your Personal Professional Portfolio once graded.
Objective:
Prepare a presentation or a paper using research, basic comparative analysis, data organization and application of economic information. You will make an informed assessment of an economic climate outside of the United States to accomplish an entertainment industry objective.
June 3, 2024 Anti-Semitism Letter Sent to MIT President Kornbluth and MIT Cor...Levi Shapiro
Letter from the Congress of the United States regarding Anti-Semitism sent June 3rd to MIT President Sally Kornbluth, MIT Corp Chair, Mark Gorenberg
Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
harassment and intimidation at the Massachusetts Institute of Technology (MIT). Failing to act decisively to ensure a safe learning environment for all students would be a grave dereliction of your responsibilities as President of MIT and Chair of the MIT Corporation.
This Congress will not stand idly by and allow an environment hostile to Jewish students to persist. The House believes that your institution is in violation of Title VI of the Civil Rights Act, and the inability or
unwillingness to rectify this violation through action requires accountability.
Postsecondary education is a unique opportunity for students to learn and have their ideas and beliefs challenged. However, universities receiving hundreds of millions of federal funds annually have denied
students that opportunity and have been hijacked to become venues for the promotion of terrorism, antisemitic harassment and intimidation, unlawful encampments, and in some cases, assaults and riots.
The House of Representatives will not countenance the use of federal funds to indoctrinate students into hateful, antisemitic, anti-American supporters of terrorism. Investigations into campus antisemitism by the Committee on Education and the Workforce and the Committee on Ways and Means have been expanded into a Congress-wide probe across all relevant jurisdictions to address this national crisis. The undersigned Committees will conduct oversight into the use of federal funds at MIT and its learning environment under authorities granted to each Committee.
• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
• The Committee on Ways and Means has been investigating several universities since November 15, 2023, when the Committee held a hearing entitled From Ivory Towers to Dark Corners: Investigating the Nexus Between Antisemitism, Tax-Exempt Universities, and Terror Financing. The Committee followed the hearing with letters to those institutions on January 10, 202
2. Introduction
◦ Financial management is concerned with procurement and use of funds. Its main aim is to use
business funds in such a way that the firm’s value/Earnings are maximized. There are various
alternatives available for using business funds. Each alternatives has to evaluated in detail. The
pros and cons of various decisions have to looked into before making a final selection. The
decision will have to take into consideration the commercial strategy of the business. Financial
management provides a framework for selecting a proper course of action and deciding a viable
commercial strategy.
◦ The main objective of the business is to maximize the owner’s economic welfare. This objective
can be achieved by :
◦ Profit maximisation and
◦ Wealth Maximisation
3. Profit Maximisation
◦ Profit maximization is the main objective of any economic activity. The
performance of a firm are evaluated in terms of profitability. Every business has
to earn profit to cover its costs and provide funds for future growth. Without
profits, no business can survive. Profit provides a cushion for any random risk
arising at any time.
4. Arguments in favour of Profit maximisation
◦ Profit maximization is the main aim of the business.
◦ It is a barometer of the performance and efficiency of a firm.
◦ Covers the cost of running a business.
◦ Provides funds for future growth.
◦ Without profit, a business cannot survive.
◦ Provides support in emergencies.
◦ Essential for fulfilling social goals.
5. Criticism of Profit maximisation
Firms start exploiting workers and the
consumers
Immoral and leads to number of corrupt
practices.
Lower human values
6. Criticism of Profit maximisation
◦ The profit maximization should be objective in the conditions of perfect competition and in the wake of
imperfect competition today, it cannot be legitimate objective of the business
◦ There is separation of management and ownership
◦ company is financed by shareholders, creditors and sinancial institutions and is controlled by professional
managers.
◦ To reconcile the conflicting interest of the parties profit maximization objective is in adequate.
7. Criticism of Profit maximisation
Drawbacks
of Profit
maximisation
Ambiguity Ignores time
value of money
Ignore Risk
factor
Dividend
policy
8. Wealth maximisation
◦ The objective of wealth maximization is a universally accepted concept in the field of business. The term
wealth means shareholder’s wealth. A shareholder’s current wealth in the firm is the product of the number
of shares owned, multiplied with the current stock price per share. The individual shareholder can use this
wealth to maximize his individual utility. Thus wealth maximization is maximising shareholder’s utility.
◦ Wealth maximization objective helps in increasing the market value of shares. The share’s market price is a
performance index of the progress of a firm. It also indicates the performance of management on behalf of
the shareholder.
◦ Thus a firm should aim at maximizing its current stock prices.
Maximum utility Refers to
Maximum shareholder’s
wealth
Refers to
Maximum current
stock price per share
9. Implication of wealth maximisation
◦ It serves the interest of suppliers of loaned capital, employees, management and society.
◦ Besides shareholder there are:
◦ Wealth maximization objective not only serves shareholder’s interest by increasing the value of
holding but ensure security to lenders
Short term
suppliers of
funds
Long term
suppliers of
funds
Interested in
liquidity
position
Priority over
shareholder
10. Arguments in favour of wealth maximisation
◦ It overcomes the limitations of the policy of profit maximization.
◦ It serves the interest of suppliers, financers, employees, management, consumers and society.
◦ The concept of wealth maximization is based on the concept of cash flows. Cash flows are not based on any
subjective interpretation.
◦ Wealth maximization considers the time value of money. Time value of money translates cash flow occurring
at different periods.
◦ The goal of wealth maximization leads towards maximizing stockholders utility r value maximization of
equity shareholders through increase in stock price per share.
11. Criticism of wealth Maximisation
◦ It is a prescriptive idea. The objective is not descriptive of what the firm actually do.
◦ Not necessarily socially desirable.
◦ There is some controversy as to whether the objective is to maximize the stockholders wealth or the wealth
of the firm which includes other financial claimholders such as debenture holders, preferred shareholders etc.
◦ It face difficulty when ownership and management are separated as is the case in most of the large corporate
form of organisations. When managers act as agents of the real owners, there is a possibility for a conflict of
interest between shareholders and the managerial interests. The manager may act in such a manner which
maximizes the managerial utility but not the wealth of stockholders or the firm.
13. Conclusion
◦ Profit maximization is a strictly short-term approach to managing a business,
which could be damaging over the long term. Wealth maximization focuses
attention on the long term, requiring a larger investment and lower short-term
profits, but with a long-term payoff that increases the value of the business.
◦ Wealth maximization is the most appropriate objective of a firm and the side cost
in the form of conflicts between the stockholders and debenture holders, firms
and society and stockholders and managers can be minimized.
14. Agency Problems
◦ At times, wealth maximization may create conflict, known as agency problem. This describes conflict
between the owners and managers of firm. Owners appoints managers as their agents to act on behalf of
them. A strategic investor or the owner of the firm would be majorly concerned about the longer term
performance of the business; that can lead to maximization of shareholder’s wealth. Whereas, a manager
might focus on taking such decisions that can bring quick result, so that he/she can get credit for good
performance. However, in course of fulfilling the same, a manager might opt for risky decisions which can
put the owner’s objectives at stake.
◦ Hence, a manager should align his/her objective to broad objective of organization and achieve a trade-off
between risk and return while making a decision; keeping in mind the ultimate goal of financial management
i.e. to maximize the wealth of its current shareholders.