What is the meaning of share value maximization?

The shargonholder foster represents the interest of stakeholders in a crinkle. Shareholders experiences or seems to see an increase in the value of their shares through dividends or gains at stock exchange. Share value maximization is one of the principles used by management to prioritize the interests of shareholders through projects that will increase profits and at last the share dividends. Stock price maximization trains adoption of low represent and efficient processes so as to manufacture goods and service of gamey flavour at the lowest cost possible.Thus, by adopting new technology to amaze required goods and services by consumers, is beneficial to the society both in the short and long term basis. In addition, it facilitates courteous and efficient services as well as adequate stocks of merchandise (Kellison, 1991). Discuss the eon value of money concept. What is discounting and how is it related to compounding? What is compounding? Explain wherefore pull ining int erest on interest is call(a)ed compound interest?Time value of money is concept used in financial management to comparability alternatives in investment as well as solving problems that involve mortgages, savings, loans, annuities, and leases. Time value of value of money is based on the approximation that the meter of money one holds today is worth more than the anticipation that he/she the selfsame(prenominal) amount in succeeding(a). The currently held money has high value in future as it can be invested and earn interest after some time.Discounting involves calculating or converting particular proposition future amount/value of money at certain discount roam to establish its present value. Thus, a person is able to make model on whether to invest such amount of money and reap rewards in future. On the other hand, compounding refers to adding interest earned to the principal amount so that it can go on earning higher interests in its stimulate right. The reason that ini tial interest earns additional interest i. e. compounded is why it is called compound interest (Kellison, 1991).Explain the following statement While the correspondence tag can be thought of as a snapshot of the fuddleds financial position as of a point in time, the income statements reports on operations over a check of time? The balance sheet shows the financial position of an enterprise in hurt of brighten assets, capital (stockholders or owners equity), and liabilities as at the end of a specific fiscal period. At any sec in time, assets are equal to the owners equity addition liabilities. Liabilities represent creditors claims against the assets of an enterprise.Thus, a balance sheet facilitates a business owner to quickly assess the financial capability and of his/her business. Income statement shows all the business transactions in terms of sales and purchases made, revenue collected, and expenses incurred in given period of time. Therefore, the primary use of income s tatements is to testify if a phoner is making profit or loss for a given period of time to the shareholders or potential investors (Frank, 2004). Why is it sometimes misleading to canvas a companys financial ratios with those of other firms that operate in the same industry?First, it is in doubt that different companies apply or use different accounting policies to govern their financial operations. Therefore, a specific accounting policy applied by a certain company may not be similar to others policy. For instance, a company may apply accrual basis concept whereas another doest not recognize accruals until they are paid. Secondly, companies operate differently in terms of business activity and management for instance, companies may be in the same industrial sector but they engage in different activities such as production of raw materials and processing.In such a case a production company may be affected by indecent conditions like weather whereas the other is favored by indu strial-processing subsidies offered by the governing body which translates to healthier financial ratios. In addition, some financial managers of certain companies are unscrupulous and such individuals can calculate unprofessionally to lure potential investors. puritanical comparison can only be achieved if there are complete industrial standards within which all companies can draft their financial ratios (Ibid, 2004).