1.

What the picture on the left is talking about

The picture on the left is talking about The Differences from Wealth
Maximization VS Profit Maximization

2. Prepare to explain to your friends in meeting

Profit Maximization
- Increasing the earning capacity of the company
- Short-term goal of any business
- Companies with profit maximization as their main goal focus on
efficiency improvement with less cost and maximum profitable output
Wealth Maximization
- Company’s abilities are focused on increasing the value of stocks for
the shareholders and stakeholders
- Long-term goal of any business
- Concentrate on increasing and improving the share market price of the
company so that the shareholders is increased
1. What the picture on the right is talking about?
The picture on the right is talking about four categories of financial
management decisions (Scope of Financial Management)

2. Prepare to explain to your friends in meeting

Maximisation of Share Value
- Revenue Growth
- Increasing operating margin
- Increasing capital efficiency

Financing Decisions
- Borrowed Fund such as, Retained Earnings Bonus and Share Capital
- Owner’s Fund such as Loans, Bonds, Debentures (Debt)

Investment Decisions
- Make decisions that have an impact on how a business operates on a
daily basis, includes choices regarding the quantities of cash,
inventory, and receivables
 Divident Decisions
- A term used to describe a financial choice regarding how much of
company’s profit should be retained for future needs versus distributed
to shareholders a as dividend

Cash Basis
- The method where payment receipts and recorded during the period in
which they are received and expenses are recorded in the period in
which they are actually paid
Accrual Basis
- The method where receipts and recorded during the period in which
they are received and expense are recorded in the period when that
transaction actually happened, even they not receive Cash
1. The pucture talking about corporate organization , from the
owners (Board of Directors) hiring Managers (President) to Supervise
the middle level of management (CHRO, COO, CFO, CMO, CTO)
and middle level of management will supervise the lower level of
management at the end what they do will have impact to the
Shareholders
1. The picture on the left is talking about Agency Costs
The risk that the agent will act in a way that is contrary to the
principal’s best interest

Internal costs arising from competing interest between shareholders

(principals) and the management team (agents).
The costs associated with resolving these disagreements and managing
the relationship are referred to as agency costs
Security / Protection
- Focuses on generating feelings of safety by paying bills on time,
increasing savings, budgeting, investing and purchasing insurance
(to prevent unauthorized access, loss or damage)

Savings
- Financial Planning need to Budgeting, Planning & Reporting, we need
to savings for short-term and investments on long-term basis as help
us grow our wealth to meet some life goals

Investment
- An investment is an asset or item acquired with the goal of generating
income or appreciation,
Investing is an effective way to put your money to work and
potentially build wealth