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Role of Profit in Business (2. Continuity of Business (incentive of…
Role of Profit in Business
1. Sources of Income
Inve
stors inv
est
text
money in
bus
iness w
ith
sol
e purp
ose
earn
in
g pr
ofit,
pro
fit i
s
sourc
e of Inc
ome.
provid
es ow
ner
o
f bus
iness
mea
n wit
h
fa
mily m
embers
li
ve
co
m
forta
bl
e life.
2. Continuity of Business
ince
ntive of
earn
ing pro
fits
kee
ps m
an
enga
ged bu
siness
act
iviti
es.
busin
ess on
ly
gro
w & ga
in
str
eng
th
ear
ns pro
fit.
ear
ning of pr
ofit
nec
essary f
or
continuity of busin
ess.
3. Expansion of Business
bu
sinessm
an
ret
ains & rein
vests
pa
rt of pro
fits
in bus
ine
ss
und
ertaking sta
nd
on s
ou
nd
foo
ting.
ex
pan
d &
dive
rsify
busi
nes
s
n
o
t o
nl
y f
ro
m
rein
vestment fu
nds
get
ting lo
ans
fr
om
exte
rnal source
s
f
or busi
ness.
4. Reward of Risk Bearing
Pro
fit re
ward
br
ingi
ng
n
ew produc
ts
or pro
ce
sses
to
mar
k
et.
rew
ard f
or ri
s
k
succ
essfully und
ertaken
5. Profit Acts as Measure of Efficiency
P
ro
fit
as a
n in
dex
perfor
ma
nce bu
sines
s,
busine
ss firm
s
ar
e
ear
ning
pr
ofi
ts.
sho
ws t
hat
co
untry
progres
sing satisfact
orily.