State with reasons, whether the following statements are True or False

1.	State with reasons, whether the following statements are True or False: Maximization of profit is real and complete motive.
Answer» This statement is FALSE. [Maximization of profit is not the real and complete motive] Reasons: Profit is a tool of measuring the success of any business firm i.e. high level profitability results in better return (dividend) to the shareholders which in turn increases their earnings per share (EPS). In simple terms, the business firm should undertake only such activities that increase profit and those activities which decrease profit should be avoided. Maximization of profit is important in regard to various factors such as: to generate funds for future expansion, better dividend to the shareholders, increase in the creditworthiness of the firm etc. However, it is not the only factor important for financial management. The proper aim of financial management is wealth maximization of its equity shareholders. Moreover, business firms now‐a‐days aim at social satisfaction and social welfare. Therefore, profit maximization along with wealth maximization and social satisfaction are the important objectives of financial management. Thus, ‘Maximization of profit is not the real and complete motive’.

State with reasons, whether the following statements are True or False: Maximization of profit is real and complete motive.

Answer»

This statement is FALSE. [Maximization of profit is not the real and complete motive]

Reasons:

Profit is a tool of measuring the success of any business firm i.e. high level profitability results in better return (dividend) to the shareholders which in turn increases their earnings per share (EPS).
In simple terms, the business firm should undertake only such activities that increase profit and those activities which decrease profit should be avoided.
Maximization of profit is important in regard to various factors such as: to generate funds for future expansion, better dividend to the shareholders, increase in the creditworthiness of the firm etc.
However, it is not the only factor important for financial management.
The proper aim of financial management is wealth maximization of its equity shareholders.
Moreover, business firms now‐a‐days aim at social satisfaction and social welfare.
Therefore, profit maximization along with wealth maximization and social satisfaction are the important objectives of financial management.

Thus, ‘Maximization of profit is not the real and complete motive’.