UNIVERSITY OF EDUCATION

Name:

Areej Waheed

Roll No:

Bsf1801062

Program:

BBA (Hons)

Assignment:

Financial Management

Submitted To:

Miss Huma Fatima

Date of Submission:

22nd March, 2021

Case Study:

Assessing the goal of sports products, Inc.

Questions:

a. What should the management of Sports Products, Inc., pursue as its overriding goal?
Why?
The overriding goal of the company should be to maximize the wealth of the owners. A firm which is not
making money and incurring huge debts will eventually cease to exist.

b. Does the firm appear to have an agency problem? Explain.

Yes, the firm has a definite “agency problem”. The profit was more important to management and this
was directly affecting their remuneration. Management was not concerned about their own interests
before the interests of the firm.

c. Evaluate the firm approach to pollution control. Does it seem to be ethical? Why might
incurring the expense to control pollution be in the best interests of the firm's owners
despite its negative impact on profits?
There is a definite lack of pollution control and the firm doesn’t seem to care. Based on this practice, it
does not seem ethical. Incurring the expense to control pollution will definitely be in the best interest of
the company, because it will not create negative publicity. This might also be tax deductible as certain
governments allow for this concession.

d. On the basis of the information provided, what specific recommendations would you
offer the firm?
I would recommend that the firm should change managements’ thinking and insist that they should
think of the firm’s interest before their own.