Value maximization may be defined as the managerial function involved in the appreciation of the long-term market value of an organization.
According to this approach, financial management should take such decisions which increase the net present value of the firm.ģ. It is also known as value maximisation or maximisation of net present worth. The wealth maximisation approach has been recognised for the evaluation of performance of a business undertaking.
This objective highlights the fact that all the decisions-financing, dividend and investment, should result in profit maximisation.Ģ. According to this approach, a firm should undertake all those activities which add to its profits and eliminate all others which reduce its profits. Profit maximisation is used as a standard of financing decisions.
