Maximize the Value of a Corporation
A question may arise to our mind that What does it mean to maximize the value of a corporation?
To understand and answer this type of question one thing is enough that, maximizing the value of a corporation indicates the value maximization of the wealth of a company. We can say the value of a corporation is maximized when the price of a stock is increased. Value maximization is preferable for the owner because it ensures not only the capital gain by selling stock in the market but also get profit through a dividend. It is management’s responsibility to ensure the value maximization.
In 2018 the stock price of a company or corporation was Tk 120 but in 2019 the price increase to Tk 210 in the secondary market. This indicates that company successfully utilizes its resources which actually increased the value or price of the stock.
We know that maximization of the value of a corporation is reflected by the increased value of a stock. Above example shows that there is an increase in the price of the stock, so we can say that value of a corporation is increased.