Profits Are Needed for More Than Compensating the Owners; for Any

question 6

Short Answer

Profits are needed for more than compensating the owners; for any young company that needs to grow they are an essential source of financing! Without profits, the company's ……….. will grow, which will decrease the company's chances of survival.

---

Definitions:

Rational Investor

An individual who makes investment decisions based on logical analysis and evidence to achieve an optimum level of benefit or utility.

Interest Rate

The percentage portion of a loan assigned as interest to the borrower, usually specified as an annual percentage of the outstanding amount of the loan.

Asset

Anything of value owned by individuals or firms that can be used or sold to produce positive economic value.

Geometric Series

A series of numbers where each term after the first is found by multiplying the previous one by a fixed, non-zero number called the ratio.