The main motive of any business is earning reasonable profits.
Importance of profit can be justified by following reasons
(i) Source of Income for Businessmen Profit is a source of income for the businessmen, as it is the excess of revenue over cost.
(ii) 'Index of Performance If a business is managed efficiently, it will earn profit. Profit is a indicator of performance and success of a business.
(iii) Source of Funds for Business Growth Profits can be reinvested in business and is a good source of finance for expansion and growth of business.
(iv) Reward for Risk Taking An entrepreneur invests money and assumes risk in a hope of earning sufficient profits. Profit is a reward for bearing these risks.