Wealth maximization means the goal of the firm should be to maximize the market value of its equity shares which represents the value of the firm to its equity shareholders. Wealth maximization means maximizing the net present value of a course of action. That financial action which has a positive net present value creates wealth and therefore is desirable. It is consistent with the objective of maximizing owner's economic welfare. It implies the fundamental objective of a firm should be to maximize the market value to its shares. In corporation, a management team is elected to manage its activities. Management is supposed to operate in the best interests of the shareholders. Some have argued that the managers could work just enough to keep stockholders' at a "fair" or "reasonable" level and then devote the remainder of their efforts and resources to public service activities, to employee benefits of higher executive salaries. Similarly, the stockholders generally hold portfolio of many different stocks to reduce total risks and to optimize the return.
Introduction In simple words the financial statements contain summarized information of the firm's financial affairs, organization systematically. It means to present the firm's financial situation to uses. Financial information is needed to predict, compare and evaluate the firm's earning ability and in decision making. The financial information is contained in the financial statement or reports. A financial statement is a collection of data organized according to logical and consistent accounting procedures. Hence, the basic purpose behind financial statement is to convey an understanding of some financial aspects of a business firm. The balance sheet and profit and loss account are the important financial statements used in business. The balance sheet gives a summary of the firm's assets and liabilities and owner's equity. The profit and loss account reflects the results of the business operating during a fixed period of time. Advantages ...
Accounting is most significant aspects of all business as it ensures the financial status of the business. It has turned out to be popular with lots of business owners assist in curtailing the burden on business owners.
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