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In any industry profit acts as a signal that buyers want more output from that industry. As the... 2. Employment generation: Profits provide incentive for firms to increase production and encourage new firms to enter into that industry. Profit describes the financial benefit realized when revenue generated from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity in question. The profit your business is making really determines the health of your company. Profit is essential for the survival of business: Profit is: A return on investment A reward for taking risks A key source of finance A measure of business success A motivating factor & incentive Profit acts as a vital role in the functioning of the economic system. ADVERTISEMENTS: This is because profit is the money you have made after your business costs have been deducted, so can clearly show you if your business is in trouble or on the right track. It goes directly to the owners of a company or shareholders, or it is reinvested in the company. Profits lead to an inducement to invest as well as to innovate. 6 Roles and Importance of Profit in Business – Explained! Profit is "money in the bank." Profit is necessary for …