0
A company that earns zero profit can never grow or obtain loans. It must eventually die off from lack of forward progress.
Wiki User
∙ 14y ago
Add your answer:
Earn +20 pts
Why the main objective of a firm is to maximize profit?
Because they need money to stay at float and be able to compete with other companies.
Why is it necessary for accountants to assume that business entity will remain a going concern?
It is a basic assumption that the owners of the business would like to stay in the business. Hence Accountants prepare the books on the same premise.
What is defition of financial accounting?
Financial accounting is the art of preparing and presenting financial information about a firm to users outside the firm. This information is usually presented in the form of financial statements (Balance Sheet, Income Statement, Statement of Cash Flows, etc). This information helps various stakeholders such as current and potential shareholders, current and potential creditors, and professional analysts make various decisions about what direction the firm is heading in and what their decisions relative to the firm should be. I always raise the caution that historical financial information should NOT be the only factor used in making investment decisions (just because a firm was profitable for the last three years does not mean it will stay profitable). However, accounting information, in conjunction with various market and industry analyses, is a useful tool when making these decisions.
How can you find out how much employees make at a non profit organization?
I work at a non-profit organization in Kansas as an office assistant. Starting out I made minimum wage, then I moved up to $7.50/hr for 2 years, and now, 3 years later, I make $10/hr. Most employees here stay at the $10/hr wage, but office administrators and department heads make up to $15/hr. I doubt the pay ever goes higher than that though. I have friends who work in other non-profit organizations, and their average pay is around $12/hr.
What does short or over budget mean?
Short means you are under your planned budget. Over means you have exceeded your planned budget. If your budget was planned correctly, the best place to be is as close to your budget as possible. If you are under budget too much, you might not be spending where you should to grow or protect your business. If you constantly are over budget, then you may be in danger of going out of business, because of lack of money to spend on the things you need to stay in business.
If there are no profits in competitive equilibrium why do firms produce how can they stay in business?
why do firm stay in business if profit is=0In economic profit is revenue minus all costs,including implicit costs,like the opportunity cost of the owner's time and money.In the zero profit equilibrium,firms earn enough revenue to cover these costs.by Abdul hanan tareen
Is a negative net profit bad?
Negative net profit is not good because the business or person didn't make any money. Companies that continue to stay in the red and not make a profit may not stay in business very long.
Why the main objective of a firm is to maximize profit?
Because they need money to stay at float and be able to compete with other companies.
What is the mission of a shoe store?
To sell shoes for a profit and stay in business while doing it.
What are The people and things that the organization needs to have to stay in business are called?
Under capitalism, a business needs to make a profit in order to survive. So capitalism is about profit-making, not about meeting the needs of customers or employees.
Why should a business think of cost?
Making profits is what a business is for. A business that doesn't consider how much it must spend in order to earn sufficient profit to remain viable won't stay in business for very long.
Why would a firm stay in business while losing money?
They might have a plan that will soon likely make them very successful financially.
Why does it make sense for unprofitable firms to stay in business?
Sometimes an unprofitable firm will have a business unit that is profitable. Operating the other units will help cover the overhead costs, allowing the business to take care of their bills.
Why do you have telecommunications?
Yes, we make use of telecommunication for business. In fact, any business including virtual law firm find telecommunication a vital part of the company.
Differentiaite between normal and supernormal profit?
Profit is the reward for entrepreneurial function. Gross profits are the surplus revenue over and above explicit costs. Net profit is the excess of gross profit over explicit and implicit cost. Gross profit contains pure economic profit which arise unforeseen changes in our dynamic economy, causing risk and uncertainty for the entrepreneur, innovations introduced by the entrepreneur and monopoly power enjoyed by the entrepreneur. Thus Gross profits = Total revenue - Total explicit costs. Pure Profit = Gross profit - Implicit cost - Total revenue (Explicit cost + Implicit costs) - depreciation.Normal profits and Supernormal profits:-The distinction between normal profit and super normal profits play an important role in economic theory. Normal profit is the reward of entrepreneurial effort. Normal profits are define as the minimum income that an entrepreneur must earn in order, to induce him to remain in the current business or industry, if the entrepreneur does not get this basic minimum he will not production.This profit is a fixed amount which is included in the cost of production. Normal profit gets distributed over the large volume of output. Normal profit is thus an incentive to produce output.This profit arises due to the function of the entrepreneur at this profit no existing firms leave the industry nor any new enter the business. The firm or the producer neither expands nor contracts business at this normal profit. Normal profit accrues to a firm in the long period. This long period profit is more for less stable and almost remains constant Normal profit can be expressed in terms of transfer costs. The entrepreneur has certain factors and services of his own which he utilizes in his business. These factors like capital, land and managerially service would have earned him certain amount of remuneration if they had been utilized in other's business.Thus the reward of these factors like interest, wage and rent which never receives constitutes the transfer earnings or opportunity cost of the above self-owned factors. Thus the normal profits of an entrepreneur are the above opportunity cost of the self-owned factors. These transfer earnings must be earned by him if he is to stay in the current business or industry.Supernormal profits are the profits earned by the entrepreneur in excess of normal profits which form a part of the cost of production. Supernormal profit or otherwise called abnormal profit arises due to risks and uncertainty bearing in the business. It also arises because of monopoly advantage and chance factors. According to Hawley an entrepreneur earns abnormal profit because of risks in the business. Abnormal profit arises on account of non- insurable risks. Non insurable risks are not predictable. There risks can not be known beforehand.If the entrepreneur successfully tides over the risks involved in the business, he wills gane huge profit. This profit arises over the normal profit. Normal profit arises an account of insurable risks. According F.H Knight Profit arises because of the uncertainty conditions in the business. Production is carried on the basis of future anticipation. Goods are produced and sold in the market.There is a big gap between production and sale. Within this gap period many things change that may upset the anticipation. The demand may decline over night. Thus he may incur loss. But if his anticipation comes true, he will earn windfall profit.Abnormal profit arises because of the introduction of innovation. An entrepreneur earns constant windfall profit so long as the same innovation is not introduced by others. Abnormal profits disappear when the innovation is universalized. Chance factors also fetch abnormal profit. No amount of human effort is made to earn this abnormal profit. Abnormal profit arising out of chance factors is short-lived. On account of natural calamity agricultural production suffers. Supply falls short of demand. Prices of output rise there by giving rise to profit.Such calamity is temporary and happens frequently. Abnormal profit also arises due to the nature of market. Under monopoly abnormal profit emerges because of the entrepreneurs' exclusive power on the production. The entries of others are strictly prohibited.The monopolist increase. The price by reducing his output. The given rise huge profit. This profit is earned exclusively for monopoly advantage. This abnormal, profit is the profit that arises over and above the normal profit. Abnormal profits are earned without entrepreneurial effort.
Why profit is important to the business?
to stay in business and pay wages, otherwise the alternative is break even or make a loss and those options do not make sense. what is the point of breaking even, the whole point is to make money, that is the only reason for business.
Are there any cashflow restrictions between Brazil and the Netherlands and if you do business in Brazil can you send your profit to the NL or will it partly stay in Brazil?
Brazilian Salad pr squid
