BUSINESS FINANCE
GROUP MEMBER
BUSINESS FINANCE TUTORIAL 2/Q3
BUSINESS FINANCE
TUTORIAL 2 QUESTION 3 Is the shareholder wealth maximization goal a shortor long-term goal? Explain your answer.
BUSINESS FINANCE TUTORIAL 2/Q3
BUSINESS FINANCE
Shareholder wealth Ø Emphasizes wealth for long term maximization ØConsider stockholders’ return ØRecognizes risk / uncertainty ØRecognizes timing of returns.
ØImpersonal, provides a clear guide for decisionmaking & risk consideration. ØObjective: maximizing the market value/price of shareholder’s common stock. BUSINESS FINANCE TUTORIAL 2/Q3
BUSINESS FINANCE
Shareholder wealth maximization goal ØLong-term goal
ØReason : Growth & sustainability of the market share prices of the owners’ common stock from 1year to another. ØLead to: –Higher market value in future. – in shareholders’ wealth. – in cash flow. BUSINESS FINANCE TUTORIAL 2/Q3
BUSINESS FINANCE
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