Bbean Essay

1736 Words Oct 22nd, 2010 7 Pages
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Essay Sample: Page 2
This, in turn, will attract shareholders to purchase more shares and also open doors for higher paid bonuses (as the management team will be paid in accordance to BBean’s net income and profitability). Management’s profit maximization objective may collide with the tax minimization goal because a higher net income means that a higher amount of tax must be paid. However, management’s profit maximization objective outweighs other objectives (like tax minimization) because of the positive impact on shareholders.

As the second set of users, shareholders (public investors) also value profit maximization and cash flow predictions for their interest in dividends. Their foremost objective will be stewardship. Thus, management performance evaluation and accurate financial recording a essential. Because their main source of income is in the form of dividends, liquidity is vital to ensure dividends are paid. Shareholders will keep a close eye on the performance evaluation BBean Coffee Inc., as well as management evaluation. This will relay information to shareholders of whether or not you, BBean Coffee Inc.’s management team, are effectively promoting the interest of the company.

The third user of BBean Coffee Inc.'s financial statements is the auditor. The auditor believes that BBean Coffee Inc. is overstating their assets if they continue to recognize revenue at the point of
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