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The obvious advantage is: the company and its owners get to keep more of the money coming in. If your business has $1 million in sales and earns 5% before tax, which is a 5% profit margin, it has $50,000 in income, which may be $35,000 after tax (assuming a 30% tax rate). Raising the pretax margin to 7% means $70,000 in pretax income, or $49,000 after-tax. If you are a sole proprietor, you can put that money in the bank. Or, you can keep it in the business to grow: open new stores, introduce new products, hire newer, more capable employees, etc. For a public company, higher profit margins generally means a higher stock price; it also makes the company more attractive as an acquisition target.
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What are advantages of cartel?
There are many advantages to cartels some of them include: The members will have higher profit marginsThe members have a network of people to work together with The members have the opportunity to keep production cost lower
Advantage of mixed economy?
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Is profit the only reward of an entrepreneur?
Not necessarily, there are many entrepreneurs that operate not for profit businesses. Some feel rewarded by a sense of accomplishment, some have a desire to promote a certain cause, some just have a passion for a particular area of endeavor. Profit is often a measure associated with business.
How is the concept of a normal return on investment related to the distinction between business and economic profit?
Economic profit is the profit made on an investment of some sort in which inflation and other economic factors have been considered. Normal return on investment is just the net profit made in the investment (simple subtraction).
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Profit maximization includes some shortcomings like it ignores the risk that corresponds to the project's stream of cash flow. The timing of returns are ignored with this objective and it does not have as much relevance to a monopoly firm.
What are some advantages of commercial patterns?
for profit
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improved sense of physical and mental well-being
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What advantages do people get from civilization?
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What are some advantages of owning a home compared to renting a place to live?
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Some of these strategies and tactics include: maintaining a high sales volume; keeping expenses down; negotiating lower wholesale prices; and cutting profit margins.
What are some advantages to having an S Corporation?
Some advantages of having an S Corporation are allowing company owners to only be taxed once. Any profit made, goes to him so he will then be taxed once rather than twice.
What are the advantages of using On-Hold Marketing Inc?
Some of the advantages of using On-Hold Marketing Inc include improved customer service, enhanced company and brand image, and reduced costs from hang ups.
What are advantages of cartel?
There are many advantages to cartels some of them include: The members will have higher profit marginsThe members have a network of people to work together with The members have the opportunity to keep production cost lower
What information needed to evaluate in buying a business?
There is some information which needs to be evaluated in buying a business. Essential information include value of capital, profit margins, location, core business and so much more.
