1) Wealth maximization as the goal of a firm implies enhancing the wealth of

a. the federal reserve

b. the creditors

c. the auditors

d. the firm's stockholders

2) The amount earned during the accounting period on each outstanding share of common stock is called ______.

Select one:

a. book value per share

b. net profits after taxes

c. earnings per share

d. dividend per share

 

Answer:

1.

Answer is: d.the firm's stockholders

Wealth maximisation as the goal of a firm implies enhancing the wealth of the firm's stockholders.

2..

Answer is c. earnings per share

Earning per share (EPS) = Net Income / Number of outstanding shares. EPS is the amount earned per outstanding share of common stock during an accounting period/financial year.Hence, EPS is the correct answer.

Book Value per share (BPS) = Total Sharehoders Equity / Number of outstanding shares. It is not related to the earnings.

Net profits after taxes is the total earnings it is not calculated on per outstanding share basis.

Dividend per share = Total Dividend to be distributed / Number of outstanding shares. Dividend per share tells the amount which has been distributed to the shareholders after retaintion.It the share of the profit which has been distributed to the shareholders.