Profit Vs Wealth

CAN UNIT TRUST BE AN EFFECTIVE TOOL TO MAXIMIZE THE WEALTH OF COMPANY SHAREHOLDERS BY MAXIMIZING THE FIRM’S COMMON STOCK SHARE PRICE?

TO OBTAIN AND ALLOCATE FINANCIAL RESOURCES EFFECTIVELY AND EFFICIENTLY TO ACHIEVE THE FIRM’S GOAL, THAT IS TO MAXIMIZE THE SHAREHOLDERS’ WEALTH BY MAXIMIZING THE SHARE PRICE.

PROFIT MAXIMIZATION Vs WEALTH MAXIMIZATION


• Financial decision making involves all aspect of our lives, from basic decisions on household spending to a complex dealing of big businesses or of a corporation.

• The understanding and comprehension of investment specifically on Unit Trust and their relationships with other business functions are essential to aid decision makers in obtaining the optimal investment that could provide minimum risk and maximum return to the company.

• The primary goal of any Financial Management in the company would be to maximize the wealth of the company apart from maximizing the company profit.

• Most businesses are set to get as much profit as possible relative the efforts, risk and capital employed as the profits are important as it will help company to:

o Maintain its operating stability
o Achieve normal growth in operations and
o Provide reward for those that contributes ideas and capital and so forth…

• To ensure the company survival in the long run, profits alone is not the only factor that contributes to the company’s viability and survival.