Question

What is the role of profit in business ?

Answer 1

Every business operates with an aim to earn more than what has been invested and profit is the excess of revenue over cost. Profit plays an important role in business:

(i) It is a source of income for business persons.

(ii) It can be a source of finance for meeting expansion requirements of the business.

(iii) It indicates the efficient working of business

(iv) It can be taken as society's approval of the utility of business.

(v) It builds up the reputation of a business enterprise.