Importance of profit

Question 1

3 reasons why profit is important?

Answer 1

1. profit is source of finance = profits can be retained in the business and used for investments. this can help business grow and increase profits . business do not need to pay interest on retained like they do with loans
2. profit is reward to entrepreneurs = entrepreneurs take risks when using their money. to compensate for risk they have taken . owners are entitled to profits made
3. measure of success= it is possible asses the performance of business by comparing it other companies particularly competitors.