Question-   What is profit maximization?

  1. What is profit maximization

The process of increasing the profit earning capability of the company. It is mainly a short-term goal and mainly is restricted to the accounting analysis of the financial year. It ignores the risk and avoids the time value of money. It is mainly concerned as to how the company will survive and grow in the existing competitive business environment.

  1. What is wealth maximization?

The ability of the company to increase the value of its stock for all the stakeholders. It is a long-term goal and involves multiple external factors like sales, products, services, market share, etc. It assumes the risk and recognizes the time value of money given the business environment of the operating entity. It is mainly concerned with the long-term growth of the company and hence is concerned more about fetching the maximum chunk of the market share to attain a leadership position.

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