What is agency theory how can setting the appropriate goals

Question

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Calculating Ratios Short Answer

1. What is "agency theory?" How can setting the appropriate goals for the firm minimize the agency problem?
2. Differentiate between profit maximization and wealth maximization.
3. Why must organizations focus on both shareholder wealth and the stakeholders?
4. Differentiate between the three financial statements with which managers should be familiar. How are they linked?