If a firm's goal is to maximize its earnings per share, this is the best way to maximize the price of the common stock and thus shareholders' wealth.

Question

Quizplus · Accepted Answer

Maximizing earnings per share (EPS) does not necessarily maximize shareholders' wealth because it does not account for risk or the timing of returns. Shareholders' wealth is maximized by increasing the stock price through sustainable growth, risk management, and strategic investments that may not immediately maximize EPS.

If a Firm's Goal Is to Maximize Its Earnings Per