MA19902C01 Lecture Notes - Profit Maximization, Project A, Cash Flow
Document Summary
Profit maximization is the main aim of any business and therefore it is also an objective of financial management. Profit maximization, in financial management, represents the process or the approach by which profits earning per share (eps) is increased. In simple words, all the decisions whether investment or financing, etc. are focused on maximizing the profits to optimum levels. It is the traditional approach and the primary objective of financial management. It implies that every decision relating to business evaluates in the light of profits. All the decisions with respect to new projects, acquisition of assets, raising capital, etc are studied for their impact on profits and profitability. If the result of a decision is perceived to have a positive effect on the profits, the decision is taken further for implementation. Profit-making is one of the most traditional, basic and major objectives of a firm. Profit-motive is the driving-force behind all business activities of a company.
