Question

Which of the following statements is not correct regarding earnings per share (EPS) maximization as the primary goal of the firm?
A.EPS maximization ignores the firm's risk level
B.EPS maximization does not specify the timing or duration of expected EPS.
C.EPS maximization naturally requires all earnings to be retained.
D.EPS maximization is concerned with maximizing net income

Answer 1

Answer:

what should we have to do in this question

Answer 2

Option (d) is not correct regarding earnings per share maximization as the primary goal of the firm.

Explanation:

• Earnings per share (EPS) is a indicator that helps indicate a company's profitability and helps the investors to know whether the company is financially safe to invest in.
• To calculate Earnings per share, the company's net income is divided by the total number of its outstanding shares.
• EPS maximization involves taking those managerial decisions which increase the profitability of the company.
• It is the capability of the company to earn maximum profit at a low cost. This acts as a standard of performance for the company as well as for investors.
• EPS maximization is concerned with maximizing the profitability of the company not with maximizing net income. So option (d) is not correct.