Difference Between Profit and Wealth Maximization?

Difference between profit and wealth maximisation?

There is a difference between profit and wealth maximisation .The profit maximisation is simply an increase in profits and it is determined at the end of the period whereas wealth maximisation is determined by the change in stock price of the company over a period of time.The profit maximisation technique is a short term technique which may not be helpful to the firm in the long run but wealth maximisation strategy focuses on the long term goals of the company and helps in making huge profits and also helps in the expansion of the business.The wealth maximisation strategy takes into consideration the timing and uncertainity and managers are willing to give up short term profits for the long term value of the company. Financial management emphasizes on wealth maximization rather than profit maximization. For a business, it is not necessary that profit should be the only objective; it may concentrate on various other aspects like increasing sales, capturing more market share etc, which will take care of profitability.

Profit maximisation is just a subset for the long term goals while wealth maximisation is the main goal for the business for the accomplishment of objectives.

Yes ,finance is important for non-financial managers.

Professionals in any industry that have some knowledge in Finance but realise that they need practical tools to help them understand and interpret financial information.

Whatever your area of expertise, you need to understand the basics of financial management. This will give you an informed view about the company's performance, and allow you to play a full role in shaping its strategy. It is imperative to understand the subject and language of finance if managers are to communicate with authority within a business. It is important to understand the subject and language of finance