1.Incentive:Profit is the driving force behind every business. It inspires people to start an enterprise and to work hard for making it successful.Profit is the reward for undertaking the risk of business.
2. Survival:Profit is essential for the survival of business and it ensure the continuity of an enterprise. In the absence of profits an enterprise will eat up its own capital and ultimately close down. with the help of profit business can replace obsolete machinery and equipment and thereby maintain its capacity to create wealth.
3.Growth:Profit is the biggest source of capital for expansion and growth of business It serves as a m,eans of self financing. In addition, profit enable business to attract capital from outside. Nobody likes to invest money in a loss making enterprise.
4.Measure of efficiency: Profit is considered to be the index of success in business. people judes the performance of an enterprise on the basis of profit earned by it.
5.Prestige and recognition: A loss making business enjoys no goodwill. Profit provide economic power and status to businessmen. Higher profits increase the bargaining strength and credit worthiness of business. Moreover, only a profit making business can provide service to society.
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