Importance of Profit

• What is the first reason why profit is important?

  It's a source of finance
• How can retained profits be used by a business?

  To fund expansion and investments
• What is the second reason profit is important?

  It's a reward for taking risks
• Why do entrepreneurs take risks?

  To potentially earn profits
• What do shareholders receive if the business makes a profit?

  Dividends
• How do not-for-profit businesses use their profits?

  To serve their mission
• How can profits benefit social enterprises?

  By serving ethical or environmental purposes
• How might profit sharing motivate employees?

  By increasing productivity
• Why is profit a sign of financial stability?

  It builds trust with suppliers
• What can suppliers do if they see a company making profits?

  Extend trade credit under favorable terms
• What does increased cash flow from profits allow a business to do?

  Increase working capital
• Why might profit not always be the primary objective for some businesses?

  Other objectives may take precedence
• What might be more important than profit for social enterprises?

  Ethical, social, or environmental reasons
• What are the key reasons why profit is important for businesses?

  • Source of finance for expansion
  • Reward for taking risks
  • Supports not-for-profit missions
  • Motivates employees through profit sharing
  • Indicator of financial stability
  • Not always the primary objective