Assessing the Goal of Sports Products, Inc.

Assessing the Goal of Sports Products, Inc.

FIN/419: finance for Decision Makers

Many people believe that the primary quill objective of a unattackable is to maximize profits. Sports Products, Inc. is a firm who has followed this practice during its 20 year history. The management of Sports Products, Inc. has concentrated on maximizing profits while ignoring other critical factors. Managements finish to maximize profits has created issues with its overriding mark, agency problem, approach to defilement control, and corporate governance. In order for Sports Products, Inc. to resolve the issues, changes need to be made in the way it operates.

Overriding Goal

The primary goal of a firm should be to achieve the objectives of its owners, also known as shareholders; therefore, management of Sports Products, Inc. should trace maximizing shareholder wealth as its overriding goal. The veritable objective of Sports Products, Inc. has been to maximize profits, but profits do not necessarily result in cash flows available to the takeholders (Gitman, 2006, p. 15). Owners completely receive cash flow when receiving dividends or selling their shares for a high price than when first purchased; Sports Products, Inc. has failed to pay dividends in its 20 year history.



Although profits may increase earnings per share, higher earnings per share do not increase clove pink prices unless accompanied by increase future cash flows. A decrease in future cash flow may result in decreased share price. The price of Sports Products, Inc.s stock has declined nearly $2 per share over the past golf club months. Because share price has decreased and share price represents the owners wealth in the firm (Gitman, 2006, p. 15), Sports Products, Inc. is failing to achieve the objectives of its owners. Pursuing the goal of maximizing shareholder wealth can lead to increased investor confidence, investments, cash flows, share price, and...

If you want to get a complete essay, order it on our website: Orderessay



If you want to get a full essay, wisit our page: write my essay .