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Why Profit Maximization Is Not The Best Goal For A Company

Question

Explain why profit maximization is not the best goal for a company. What is an appropriate goal and why?


Summary

The major functions of Financial Management are Profit maximisation, Wealth Maximisation and Cost minimisation etc. But is profit maximisation the best goal of a company? No, it is not, though earning profit is important for a business to continue or sustain, or for further reinvestment, or as said ‘ploughing back the profit’, it is not always the best goal. This has been further explained in the solution.

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