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:

Soda Cans

Aluminum containers used for packaging soft drinks and other beverages, chosen for their lightweight, durability, and recyclability.

Marginal Cost

The cost for the creation of one extra unit of a product or service.

Marginal Revenue

The extra revenue obtained by selling an additional unit of a product or service.

Marginal Revenue

The additional income gained from selling one more unit of a product or service.