The success of a business concern depends upon the way in which it earnings are computed ,distributed and retained . Comment
Answers
The computation, distribution and retention of earnings are essential in identifying the profitability of the business. Its profitability is without doubt essential for the business to continue its operation.
The business cannot be sustained for long time without making a profit. However, profitability is not the only way to determine the success of a business in the long run. After the business reached being profitable, the business should look into the opportunities for growth of the company. Growth, through expansion of product lines or market, can provide greater earnings and higher numbers of investors of the company. This can assure that the business will continue to be successful over along period of time.
Therefore, we can say that the success of the business depends not only on profitability but on growth as well.
Chiefs of cited organizations every so often get condemned for confining the estimation of profits and for storing excessively money in the business.
Whenever held benefits don't result in higher benefits at that point there is a contention that investors could improve returns by having the money for themselves.
Some may be in the bank; some may be spent on extra plant and apparatus; maybe some are reinvested in more inventories or used to decrease overdrafts or credits.