suppose you are Finance manager believes on maximizations profit do you agree explained
Answers
Explanation:
According to conventional theory of the firm, profit maximization is considered to be the principal objective of the firm because price and output decision associated with a firm is usually based on the profit maximization criteria. Profit maximization refers to maximizing dollar income of the firm.
According to this goal, the actions that increase profits should be undertaken and those that decrease profits are to be avoided. Those who are in favor of profit maximization argue that profit is a test of economic efficiency; it leads to effective utilization of scaring economic resources in every business firm, and it leads to total economic welfare since it increases the economic efficiency of every individual firm.
Therefore, profit maximization is considered to be a basic criterion for financial decision-making. However, this goal is not appropriate on the following grounds