How Is Wealth Maximization Measured?


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Katie Harry answered
Some years ago, the approach was to measure only the profit in terms of net income. But there is a modern approach according to which besides measuring the profit, the degree of wealth maximization is also measured.

The basic objective of maximizing wealth is to create more value for the shareholders and increase the net worth. Measuring the wealth maximization basically involves examining the earning per share. The concept of wealth maximization is basically related to the generated cash flows rather than the profits.

You can find the maximized wealth by finding the difference between the gross present worth of a project and the investment that is required to perform the endeavor. If the result of this is greater than zero, then it means that wealth would be created.

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