the relationship between shareholders and maximization of profits

Difference Between Profit Maximization and Wealth Maximization

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the proper utilisation of funds in such a manner that it will increase the value plus earnings of the firm. Profit Maximization as its name signifies refers that the profit of the firm should be increased while Wealth Maximization, aims at accelerating the worth of the entity.

Comparison Chart

BASIS FOR COMPARISON	PROFIT MAXIMIZATION	WEALTH MAXIMIZATION
Concept	The main objective of a concern is to earn a larger amount of profit.	The ultimate goal of the concern is to improve the market value of its shares.
Emphasizes on	Achieving short term objectives.	Achieving long term objectives.
Consideration of Risks and Uncertainty	No	Yes
Advantage	Acts as a yardstick for computing the operational efficiency of the entity.	Gaining a large market share.
Recognition of Time Pattern of Returns	No	Yes