Answer:
Ans. Profit plays a vital role in any business. Earning of profit is essential for any business because of the following reasons given below:
(a) Means of Livelihood: Profits act as a means of livelihood for the entrepreneurs. Without profits, entrepreneurs cannot continue with the business.
(b) Rewards for taking risks: It provides returns for taking risks.
(c) Funds for Growth: It would provide funds for growth of the business.
(d) Symbolic of efficiency and efficacy: Profits symbolise that management is efficient and business is operating in a healthy manner.
(e) Enhancement in goodwill: A business making higher profits has a better goodwill and reputation in the market.
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