“Profit is not an objective but a requirement of business.” Do you agree with this statement? Give reasons to support your answer.
Answers
Reason-
Reward for bearing risk-profit is considered as a price of reward paid to a businessman for repairing the risk Businessman invest money in the business only with the hope of earning profit prior to earn profit motivate the Businessman to be the uncertainty is an Unexpected profit and risks are directly related to each other the higher the risk ,the more is the profit and the, lower the risk less is the profit.
Answer:
Yes I agree.
A business must earn profit because of the following reasons:
(a) For long-term survival : Profits alone help a business to continue to exist for a long time. It has
been observed that for achieving other economic as well as social objectives, profit must be earned. The business in which the profit is meagre or no profit is earned, closes down quickly.
(b) For rapid growth: Profit provides a sound financial structure for the growth and expansion of the
business.
© Increases the efficiency of business : It acts as an incentive, motivating workers to contribute their
maximum worth to the enterprise. Profit increases with the increase in efficiency and improved performance of the organisation.
(d) For building reputation and recognition : If the business earns adequate profits, it will pay fair and competitive wages to its employees, dividends at competitive rates to shareholders, etc. In other words, all the parties can be satisfied. This helps the business to earn reputation and goodwill in the society.