Question

The primary goal of coporate managers is
1. Maximize revenue of firm
2. Maximize Market Share of Firm
3. Maximize Earnings per share of firm
4. Maximize brand image
5. Maximize price per share of common stock of firm

Answer 1

The primary goal of corporate manager is to maxamize stockholders wealth. We will say that stockholders wealth is maximized when the price of common stock in the market is more and they are earning high returns. In order to maxamize stockholders wealth, the companies earnings after tax should be high so that high dividends are paid to equity and preference shareholders and even after distribution of such dividend the company is left with sufficient funds which if further invested give high returns.

For high profit after tax, the profits should be high i.e., high revenues and less expenses.