1 Explain the differences between wealth maximization and profit maximization. Explain relation between finance and accounting Differences between wealth maximization and profit maximization Explanation of relation between finance and accounting
Answer: Wealth maximisation vs. profit maximisation
- Wealth maximisation is based on cash flow. It is not based on theaccounting profit as in the case of profit maximisation.
- Through the process of discounting, wealth maximisation takes care ofthe quality of cash flow. Converting uncertain distant cash flow intocomparable values at base period facilitates better comparison of