A Financial Manager's Goal of Maximizing Current or Short-Term Earnings

question 13

Multiple Choice

A financial manager's goal of maximizing current or short-term earnings may not be appropriate because

• A) it fails to consider the timing when shareholders want increased earnings and may instead consider the manager's own goals.
• B) increased earnings may be accompanied by unacceptably higher levels of risk.
• C) earnings are subjective; they can be defined in various ways such as accounting or economic earnings.
• D) All of the options are true.

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Definitions:

Sales

The transactions involving the exchange of goods or services for money; it represents the total amount of revenue generated by a business.

Accounts Receivable

The amount of money owed to a company for goods or services that have been delivered but not yet paid for.

Exchange Rates

The price at which one currency can be converted into another currency, influencing international trade and investments.

Balance Sheet

A financial statement that displays a company’s financial position at a certain date, listing assets, liabilities, and shareholder equity.