Managerial Finance Assignment Essay
Open University Malaysia Semester 2, Sept 2013
BMFM 5103 – Financial Management
If the goal of a firm is to maximize the shareholder wealth does it mean profit is not important at all? Explain your answer. (5 marks)
Maximizing the shareholder’s wealth is long term process. Shareholder wealth is maximized by maximizing the difference between the market value of the firm’s stock and the amount of equity capital that was supplied by shareholders (Brigham & Ehrhardt: 2011). In order to maximize the value of the firm the managers should make all decisions to increase the total long run market value of the firm. Therefore the …show more content…
A Partnership is a business owned by two or more persons for profit. There are there classification of partnership; general partnership, limited partnership and limited liability partnership. The advantages are that a partnership business is relatively easy to form although considerable amount of time taken in developing the partnership agreement. It is easier to raise capital as there is more than one investor. Any income is declared as the partners’ personal income tax returns; thus there are no corporate income taxes. The disadvantages of partnership are partners are jointly responsible for all the obligations of the business. And disputes or conflicts may occur when partners make decision together.
A corporation is a limited liability entity doing business owned by multiple shareholders and is overseen by a board of directors elected by the