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Questions and Answers
What is one potential problem with adopting profit maximisation as an objective?
What is one potential problem with adopting profit maximisation as an objective?
- Wealth generation
- Non-cash based measures
- Short-termism risk (correct)
- Earnings per share growth
How can managerial performance targets and rewards affect the adoption of profit maximisation as an objective?
How can managerial performance targets and rewards affect the adoption of profit maximisation as an objective?
- Strengthen earnings per share growth
- Support non-cash based measures
- Promote wealth generation
- Encourage manipulation of results (correct)
What distinction needs to be made in terms of outcomes when considering profit maximisation?
What distinction needs to be made in terms of outcomes when considering profit maximisation?
- Maximising vs. satisficing (correct)
- Wealth generation vs. profit
- Short-termism vs. long-termism
- Profit vs. earnings per share growth
Which measure can permit manipulation of results when profit maximisation is the objective?
Which measure can permit manipulation of results when profit maximisation is the objective?
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Why is it important to remember the difference between profit and wealth generation according to the text?
Why is it important to remember the difference between profit and wealth generation according to the text?
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