Which the following would not be considered by a firm that has a goal of maximizing stock price? If a firm establishes maximizing profits as the most important goal of the firm, which of the following would not be given proper consideration?
A) Sales revenues
B) Profits
C) Risk of bankruptcy
D) Cost of goods sold

Question

Quizplus · Accepted Answer

If a firm has a goal of maximizing stock price, it would consider all factors that could potentially affect the stock price. However, if a firm establishes maximizing profits as the most important goal, it may not give proper consideration to the risk of bankruptcy, as it may be tempted to take on more risk to increase profits. Therefore, C (risk of bankruptcy) would not be considered in this scenario. A (sales revenues), B (profits), and D (cost of goods sold) would be considered, as they all have an impact on profits, which is the primary goal of the firm.

Which the Following Would Not Be Considered by a Firm