What is the difference and connection between corporate revenue maximization and profit maximization

Profit minus cost is profit. Revenue maximization is not equal to profit maximization, if the cost is high, even if the revenue is the largest, then the profit may not be very large, so many manufacturers are more in pursuit of profit maximization, rather than revenue maximization.

Manufacturers are engaged in the production or production of goods for the purpose of making a profit. If the total benefit is greater than the total cost, there will be a surplus, and this surplus is the profit. It is worth noting that the profit mentioned here does not include normal profit, which is included in the total cost, and the profit mentioned here refers to excess profit.

If the total revenue is equal to the total cost, the manufacturer will not lose or earn, but only get normal profits, if the total revenue is less than the total cost, the manufacturer will incur a loss.

Maximizing profits is the ultimate goal of the enterprise, and there are many factors that affect it, mainly in two aspects, one is to expand product revenue, profit is created by income, and there is no guarantee of income on the amount, and profit is impossible to talk about. The second is to strictly control the cost and expense, while the profit increases, the less the cost and expense, the greater the profit.

In addition, generally speaking, if the cost jump is not too large, revenue maximization can also be used to approximate the measurement of profit maximization, but the more common approach is still revenue maximization.

Improving the economic efficiency of enterprises is closely related to the determination of financial management goals of maximizing profits and maximizing enterprise value. Whether the economic benefits of an enterprise are good or bad, only with the help of financial indicators, such as capital, cost, income and profit, etc., can be revealed and reflected, especially profit (including maximization of return on capital and profit per share), among many financial indicators, it is a comprehensive embodiment of the final financial results. In order to optimize economic benefits, enterprises must compare revenue and expenditure, offset expenditures with revenues and expenditures, and increase profits, which is the basic theoretical basis for determining financial management objectives for profit maximization and enterprise value maximization.

The intrinsic link between financial goals such as profit and enterprise value.

1) The relationship between profit and return on assets, profit per share, and earnings per share.

In financial accounting, the formula for calculating profit, return on assets and profit per share is as follows:

1.Profit. Total profit = operating profit + investment income + subsidy income + non-operating income - non-operating expenses + profit and loss adjustment for previous years.

Net profit (profit after tax) = total profit - income tax expense.

Where: operating profit = main business profit + other business profit - management expenses - financial expenses.

Profit from main business = income from main business - cost of main business - operating expenses - tax and surcharge of main business.

2.Return on assets.

Return on equity = profit after tax 100% of owners' equity

Return on total assets = profit after tax 100% of total assets

3.Earnings per share and earnings per share.

Profit per share = profit after tax Total share capital.

Earnings per share and earnings per share are consistent, which refers to a company's profit for a certain period of time (which can be divided into pre-tax and after-tax) divided by the total number of shares, which is generally commonly used as after-tax earnings per share, and the calculation formula is: earnings per share = after-tax profit Total share capital.

As can be seen from the above formula, the return on assets, earnings per share and earnings per share directly depend on the amount of after-tax profit under the condition that other conditions such as owners' equity, total assets and total share capital remain unchanged. Therefore, in the case of a single enterprise, if the goal of profit maximization is achieved, as long as all other conditions remain the same, then the other goals will naturally be achieved. Conversely, if profits are not maximized, the other indicators mentioned above cannot be maximized either.

Therefore, profit maximization is a sufficient and necessary condition for maximizing the return on assets, maximizing profit per share, or maximizing earnings per share.

The first derivative of the total return tr is 0 when the return is maximized, and the first derivative of the total profit b is 0 when the profit is maximized

Profit maximization does not consider the value of time, does not consider the issue of risk, and does not consider the relationship between input and output.

Earnings per share maximization links profits to shareholders' invested capital, but still does not take into account the issues of time and risk.

The only difference between them is that the latter can compare businesses of different sizes because it calculates "per share".

Necessary conditions for maximizing manufacturers' profits.

It is the marginal return on production.

equal to marginal cost.

Manufacturers engaged in the production or production of goods not only require profits, but also require maximum profits.

Whether the marginal benefit is greater than or less than the marginal cost, the manufacturer will change the output in order to increase the profit, and only when the marginal benefit is equal to the marginal cost, the manufacturer will not adjust the output. 1. The profit maximization condition applies to the type of market structure that is raised.

The difference between revenue maximization and profit maximization is that both are defined differently. Benefit is the sum of cost and profit difference, then the condition for maximizing income is to expand production, and maximizing production is to maximize income; Profit refers to the profit after deducting the cost, and the remaining is the profit, so under the same income condition, the condition that needs to meet the maximum profit is to reduce the cost as much as possible. Therefore, when enterprises are in production and operation, they usually pursue profit maximization rather than revenue maximization.

The connection between the maximization of income and the maximization of Liqing sedan is that the relationship between income and profit is a relationship of belonging. Earnings include profits, but are not equivalent to profits; Profit is only part of the revenue, and the profit is not only the profit, but also the cost. Therefore, from the relationship between revenue, cost and profit, it is not difficult to see that when the profit of lead is maximized, the cost is also very large, so the profit may not be maximized; Profits can only be maximized by controlling costs and minimizing costs while maximizing revenues.

The condition should be mr=mc

From the perspective of marginal benefit-marginal cost analysis.

The intersection point E of MR and MC is the equilibrium point for the manufacturer to maximize profits, and the output Q at this time is the best output, if the output selected by the manufacturer is less than Q, then the selling limb manufacturer is in the stage of MR>MC, which indicates that the benefit of each additional unit of output of the manufacturer is greater than the cost increment it pays, and the trade-off is that the manufacturer chooses to continue to increase the output in order to obtain more profits. However, since MR always remains the same and MC increases, the status of MR>MC will gradually transform into MR=MC. Conversely, if the producer chooses to produce Dachang at Q, then the manufacturer is at MR

We should also note that at the equilibrium point of mr=mc, the manufacturer may be profitable or loss-making. If the manufacturer is profitable, then the profit brought by the output at this time must be the maximum profit; If the manufacturer is losing money, then the loss caused by the output at this time is the smallest loss.

The maximization of corporate profits refers to the goal of maximizing the total profits of the enterprise through effective resource allocation and decision-making in a specific business environment. This is one of the common goals pursued by business operators.

Maximizing corporate profits typically involves the following:

Cost control: Enterprises need to reduce production costs, including raw material procurement, labor costs, operating expenses, etc. By improving production efficiency, optimizing chain management, and finding more competitive suppliers, we can effectively control costs and improve profits.

Optimization: Businesses need to identify the right product pricing strategy to maximize profits in the market. This may involve market research, competitive analysis, consideration of factors such as consumer demand and resilience to determine the optimal level.

Sales and market share: Enterprises need to strive for more market share and customers through active marketing activities and sales strategies to increase sales revenue. This may include measures such as marketing, advertising, customer relationship management, etc.

Product innovation and differentiation: Through continuous product innovation and product quality, companies can attract more consumers and market share and achieve higher profit levels. Differentiated products and services can often bring a higher competitive advantage and premium space to the enterprise.

Capital investment and financial management: Businesses need to carry out effective capital investment and financial management to ensure the full utilization of funds and maximum returns. This includes the evaluation of investment projects, financing, risk management, etc.

It is important to note that maximizing corporate profits does not mean the unlimited pursuit of short-term profits, but rather a combination of long-term development and sustainability. In practice, companies also need to balance multiple economic, social and environmental interests, and comply with legal regulations and ethical norms.