MANAGEMENT

Detailed explanation-1: -The essential difference between the maximization of profits and the maximization of wealth is that the profits focus is on short-term earnings, while the wealth focus is on increasing the overall value of the business entity over time.

Detailed explanation-2: -Profit maximization is an inappropriate goal because it’s short term in nature and focus more on what earnings are generated rather than value maximization which comply to shareholders wealth maximization. Wealth maximization overcomes all the limitations that profit maximization possesses.

Detailed explanation-3: -Profit maximization is a short term objective of the firm while the long-term objective is Wealth Maximization. Profit Maximization ignores risk and uncertainty. Unlike Wealth Maximization, which considers both. Profit Maximization avoids time value of money, but Wealth Maximization recognises it.

Detailed explanation-4: -Wealth maximization is the concept of increasing a firm’s worth to increase the value of stockholders’ shares. Wealth maximization is also known as net worth maximization.

Detailed explanation-5: -The statement is FALSE. The primary financial goal of a corporation is to grow its valuation in the future. Alternatively, it is to maximize the shareholders’ wealth. On the other hand, profit maximization is a short-run objective, which could cost the business future if managers ignore sustainable growth.