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Accounting for Decision Making and Control 6th Edition by Jerold Zimmerman
Edition 6ISBN: 9780071283700Accounting for Decision Making and Control 6th Edition by Jerold Zimmerman
Edition 6ISBN: 9780071283700 Exercise 2
A finance professor and a marketing professor were recently comparing notes on their perceptions of corporations. The finance professor claimed that the goal of a corporation should be to maximize the value to the shareholders. The marketing professor claimed that the goal of a corporation should be to satisfy customers.
What are the similarities and differences in these two goals
What are the similarities and differences in these two goals
Explanation
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Accounting information is used by wide variety of users. They use the accounting information for different purpose. To analyze the financial health of the company they use this information. This information provides details about the past performance and future prospects of the company. It provides constructive information which is used by wide variety of users. The financial statement user use different measures to evaluate the financial performance like indexes, ratios and percentages.
A Company's Financial Statement provides imperative information about the company's financial health. It provides vital information to extensive range of users. It helps in taking the economic decision regarding the companies. The management has to prepare the financial reports in accordance with applicable laws.
The key resemblance between these two goals is that both goals are set to maximize the profit of the organization. The financial department wants to maximize the shareholders wealth. Finance manager always think in terms of enhancing the benefit of the shareholders. The customer's satisfaction is the key goal of the marketing department. The goal of both the department is same to maximize shareholders wealth. The ultimate goal of both department is to maximize profit but with different goals. They choose different direction to reach the same goal.
The base of the marketing department is customer. The will try all possible ways to satisfy customers. When the customer is satisfied the marketing goal will be reach and the profit of the organization will maximize.
The main goal of finance department is maximizing shareholder wealth. Maximizing share holders wealth necessarily not always means customer satisfaction.
So both the department goals are different.
A Company's Financial Statement provides imperative information about the company's financial health. It provides vital information to extensive range of users. It helps in taking the economic decision regarding the companies. The management has to prepare the financial reports in accordance with applicable laws.
The key resemblance between these two goals is that both goals are set to maximize the profit of the organization. The financial department wants to maximize the shareholders wealth. Finance manager always think in terms of enhancing the benefit of the shareholders. The customer's satisfaction is the key goal of the marketing department. The goal of both the department is same to maximize shareholders wealth. The ultimate goal of both department is to maximize profit but with different goals. They choose different direction to reach the same goal.
The base of the marketing department is customer. The will try all possible ways to satisfy customers. When the customer is satisfied the marketing goal will be reach and the profit of the organization will maximize.
The main goal of finance department is maximizing shareholder wealth. Maximizing share holders wealth necessarily not always means customer satisfaction.
So both the department goals are different.
Accounting for Decision Making and Control 6th Edition by Jerold Zimmerman
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