'Ploughing back of profits' holds the key to success of business enterprises. Do you agree? Give three reasons.
'Ploughing back of profits' holds the key to success of business enterprises. Do you agree? Give three reasons.
Yes, I agree with the statement that the ploughing back of profits holds the key to success of business enterprises because of the following reasons :
(i) Debt position: Profits imply that the business can not only cover the overall expenses but a surplus that can be reinvested in the business to pay off short-term debts.
(ii) Cash flow position: Businesses need to maintain a certain amount of cash from profits that can be used to invest in raw material, maintenance of equipment, etc.
(iii) Attract investors: Profitability allows businesses to raise more capital from investors as it builds more confidence in business by providing higher returns on their investment.
Yes, I agree with the statement that the ploughing back of profits holds the key to success of business enterprises because of the following reasons :
(i) Debt position: Profits imply that the business can not only cover the overall expenses but a surplus that can be reinvested in the business to pay off short-term debts.
(ii) Cash flow position: Businesses need to maintain a certain amount of cash from profits that can be used to invest in raw material, maintenance of equipment, etc.
(iii) Attract investors: Profitability allows businesses to raise more capital from investors as it builds more confidence in business by providing higher returns on their investment.
