The Premises of Maximizing Profits or Shareholder's Value - Finance Assignment Help

Assignment Task:

This assessment has 2 parts. Part A consists of a written report where you will discuss concepts and theories associated with modules 1 and 2. Part B is a reflective practice activity that will give you the opportunity to reflect on a personal experience related to Part A

Background
Understanding the difference between maximizing profits and maximising the value of the corporation is fundamental for the financial manager. For a decision that leads to an increase in short-term profits might lead to a destruction of value in the long-term, thus jeopardizing the ability of the organisation to remain competitive and, hence, sustainable.

Part A of the interim assessment aims to shed light on this issue and is based on the recent grounding by airlines around the world of the Boeing 737 Max.

Part B asks for a reflection based on a real-life example/situation connected to this matter that you have personally experienced in the past.

Assignment questions
In light of the above, answer the questions below:

1. Has Boeing been operating under the premises of maximizing profits or shareholders' value? Explain.

2. Which principles of finance has the company followed/been subjected to?
In particular, elaborate on the principles of risk-return, individuals respond to incentives, and market price reflects information.

3. Explain how the company's profitability and market value ratios are likely to be impacted following the grounding of the aircraft.

4. If maximizing shareholders' wealth is tantamount to maximizing the company's share price, what has been the impact of Boeing's issues with its 737 Max on the value of the business? Explain your answer. (Hint: Use Yahoo! Finance to compare the behaviour of Boeing's stock price before and after March 11, 2019.)

Part B: Reflective Practice

Questions

1. Explain how the situation was handled, and whether the course of action chosen was in alignment with maximizing the (long-term) value and sustainability of the business.
2. Were there any conflicts of interest involved?
3. Was the decision made accepted and understood by the stakeholders?
4. In your view (and once again based on your work experience), would it be reasonable to say that finance has reached such prominence within corporations to the point of compromising ethical standards, as hinted in Admati (2017)?
5. Please follow the guidelines for reflective practice when addressing the issues raised above

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