Question

18. Profit maximization as the goal of the firm is NOT ideal because
(a) profits are only accounting measures
(b) cash flows are more representative of financial strength
(c) profit maximization does not consider risk
(d) profits today are less desirable than profits earned in future years​

Answer 1

Answer:

(a) Profits are only accounting measures

Answer 2

Answer:

Profit maximization  is NOT ideal goal of the firm because (c) profit maximization does not consider risk.

Explanation:

• Profit Maximization is the ability of a company to earn the maximum profit with low cost which is the main target of the firm and also an objective of Financial Management.

• Profit Maximization has benefits of its own but one of the main draw back of this concept is profit maximization does not consider risk.

• Profit maximization modal ignores the risk factor which may be harmful for existence of the firm in the long run.

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