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Quality of Benefits

Quality of Benefits Probably the most important technical limitation of profit maximization as in operational objective, is that it ignores the quality aspect of benefits associated with a financial course of action. The term quality here refers to the degree of...

Time Pattern of Benefits (Profits)

Time-Pattern of Benefits (Profits) TABLE 1.1 It can be seen from Table 1.1 that the total profits associated with the alternatives, A and B, are identical. If the profit maximization is the decision criterion, both the alternatives would be ranked equally. But the...

Timing of Benefits

Timing of Benefits A more important technical objection to profit maximization, as a guide to financial decision making is that it ignores the differences in the time pattern of the benefits received over the working life of the asset, irrespective of when they were...

Ambiguity

Ambiguity One practical difficulty with profit maximization criterion for financial decision making is that the term profit is a vague and ambiguous concept. It has no precise connotation. It is amenable to different interpretations by different people. To illustrate,...

Making Financing Decisions

Making Financing Decisions Financing decisions involve two major areas: first, the most appropriate mix of short-term and long-term financing; second, the best individual short-term or long-term sources of financing at a given point of time. Many of these decisions...