Question

1 point
2. The shareholders value maximisation goal
holds that the primary goal of the firm is to
maximise its:
A. Accounting Profit.
O B. Liquidity.
O C. Market value.
O D. Working Capital​

Answer 1

The shareholder wealth maximization goal states that management should seek to maximize the present value of the expected future returns to the owners (that is, shareholders) of the firm. ... Thus, total shareholder wealth equals the number of shares outstanding times the market price per share.

Answer 2

Answer:

The shareholders value maximisation goal holds that the primary goal of the firm is to maximise its: The correct option is  C. Market value.

Explanation:

The shareholder value maximisation goal is a popular theory in modern corporate finance that asserts that the primary goal of a firm is to maximise its market value.

This means that the firm's management should make strategic decisions that increase the value of the company's stock price and, in turn, the wealth of its shareholders.

Accounting profit, liquidity, and working capital are important considerations for a firm, but they are not the primary focus of shareholder value maximisation.

While accounting profit ⇒ a company's profitability over a specific period, it may not reflect the long-term value of the firm. Similarly, while liquidity and working capital are crucial for meeting short-term obligations, they do not necessarily contribute to the long-term value of the firm.

∴, by maximising its market value, the firm can create sustainable long-term value for its shareholders, which can be achieved through various strategies such as revenue growth, cost reduction, and investment in profitable opportunities.

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