Explain the importance of profit in business
Answers
Answer:
Profit equals a company's revenues minus expenses. 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 operations and grow its business. Companies cannot remain in business without turning a profit.
Explanation:
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YOUR QUESTION :
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Explain the importance of profit in business
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ANSWER:
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Profit is the amount of money remaining after all the expenses of running the business are paid--total revenues minus total expenses. In the short term, a business can lose money and still keep going by drawing on previously accumulated cash reserves. Start-up technology companies sometimes incur losses for several years and use venture capital to fund operations until they reach positive cash flow. But over the longer term, earning a profit is essential to a company’s survival.
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