As stated in the book, the goal of
financial management is to maximize the current value per share of the existing
stock (Ross, Jordan, & Westerfield, 2016). This goal of enhancing current
market value per share leaves out the matter of contention between short-term
and long-term profits. In fact, the consideration of short-term and long-term
profits would better be suited in a statement discussing profit maximization vs
wealth maximization. Theoretically, managers look to and rely on current stock
value to indicate the risk (both short-term and long-term risk), the timing,
and the degree/magnitude of future expected earnings and cash flows (Ross,
Jordan, & Westerfield, 2016). So, if all of the aforementioned points are
to be considered true, then it’s suggested that the originally given statement
is in fact, false.


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