In today's business world one can not have the profits as the only and main goal of doing business. One can have different types of profits like-
- Short term & Long term profits
- Pre-tax and Post-tax profits
and so on……….
It should be noted that profits and risk go simultaneously, that is to earn more profits one must take more risks and find new business opportunities.
So while doing business and planning for any decison it should always be kept in mind that business decisions involves risk and uncertainty. Therefore its wiser to consider risk following any major course of action.
| Year | Company X | Company Z |
| 1st Year | - | 45000 |
| 2nd year | - | 35000 |
| 3rd year | 100000 | 20000 |
In the above example profits were shown for two companies X , Z. As per the table above one can conclude that company Z is better as it has returns in the first year and then again in second year. However X is earning the same amount in the third year. Since returns earned earlier are more valuable than the returns earned later based on the time value of money concept, company Z is better.
Moreover by keeping the profits as the sole goal of the business one can completely ignore the rise factors, interests of workers, consumers, society and environment and ethical trade practices, and a business cannot survive for long if all these factors were ignored.
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