The most appropriate goal of the firm is shareholder wealth maximization. This is because shareholders are the owners of the firm and they have the right to expect that the firm will be managed in their best interests. Profit maximization is not always the best goal for a firm because it can lead to short-term thinking and a focus on cutting costs at the expense of long-term growth. Stakeholder maximization is also not always the best goal because it can lead to conflicts of interest between different stakeholders. EPS maximization is not a good goal because it is not a measure of the firm’s overall performance.
Shareholder wealth maximization is the goal of maximizing the value of the firm’s stock. This can be done by increasing the firm’s profits, increasing the firm’s assets, or decreasing the firm’s liabilities. Shareholder wealth maximization is the most appropriate goal of the firm because it is in the best interests of the shareholders. Shareholders are the owners of the firm and they have the right to expect that the firm will be managed in their best interests.
Profit maximization is the goal of maximizing the firm’s profits. This can be done by increasing the firm’s revenues or decreasing the firm’s costs. Profit maximization is not always the best goal for a firm because it can lead to short-term thinking and a focus on cutting costs at the expense of long-term growth.
Stakeholder maximization is the goal of maximizing the well-being of all stakeholders of the firm. This includes shareholders, employees, customers, suppliers, and the community. Stakeholder maximization is not always the best goal for a firm because it can lead to conflicts of interest between different stakeholders.
EPS maximization is the goal of maximizing the firm’s earnings per share. This can be done by increasing the firm’s profits or decreasing the number of shares outstanding. EPS maximization is not a good goal because it is not a measure of the firm’s overall performance.