Question

The goal of the firm should be maximize earnings per share

Answer 1

Answer:

There are many goals of firm:

1. Profit Maximisation

2. Wealth Maximisation

Both will help to increase the earning per share. Wealth Maximisation means procurement of funds and allocation of resources at the optimist level.

It will help firm to increase sharrholder wealth.

Profit maximisation is not much helpful than wealth maximisation because it ignores the time value of money.

If value of shares is increase every year in a positive way than the firm's goodwill will increase in market and it shows the growth of firm.