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| 1. |
Explain role of profit in business |
| Answer» The success of a small business depends on its ability to continually earn profits. Profits is the total revenue from sales minus the total cost of resources employed by the entrepreneur. Earning a profit is important to a small business because profitability impacts whether a company can secure financing from a bank, attract investors to fund its operation and grow its business. Companies cannot remain in business without turning a profit .<br>Profit is a source of finance for expansion and diversification of business activities, A part of the profits can be retained for increasing the volume of the business. ... or goodwill of the business firms. With profit increasing over time, a business enterprise gains reputation. | |