Banks and financial corporations look at sales revenue whilefinancing the corporation.
Trend in sales revenue is a readily available indicator of theperformance of the firm.
Maximisation of Firms Growth rate:
Managers maximize firm’s balancegrowth rate subject to managerial & financial constrains balance growth ratedefined as:G = G
= Growth rate of demand of firm’s product & G
= growth rate of capitalsupply of capital to the firm.In simple words, A firm growth rate is balanced when demand for its product &supply of capital to the firm increase at the same time.
Maximisation of Managerial Utility function
: The manager seek tomaximize their own utility function subject to the minimum level of profit.Managers utility function is express as:U= f(S, M, I
) Where S = additional expenditure of the staff M= Managerial emolumentsI
= Discretionary InvestmentsThe utility functions which manager seek to maximize include both quantifiable variables like salary and slack earnings; non- quantifiable variables such asprestige, power, status,Job security professional excellence etc.
Long run survival & market share:
according to some economist, theprimary goal of the firm is long run survival. Some other economists havesuggested that attainment &retentionof constant market share is an additionalobjective of the firm’s. the firm may seek to maximize their profit in the longrunthroughit is not certain.Entry-prevention and risk-avoidance, yet another alternative objectives of thefirms suggested by some economists is to prevent entry-prevention can be:1.Profit maximisation in the long run2.Securing a constant market share