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#cfa #cfa-level-1 #economics #lol #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-2-objectives-of-the-firm #study-session-4
Without profit, the business eventually fails; with profit, the business can survive, compete, and prosper. The question is: What is profit? Economists, accountants, investors, financial analysts, and regulators view profit from different perspectives. The starting point for anyone who is doing profit analysis is to have a solid grasp of how various forms of profit are defined and how to interpret the profit based on these different definitions.
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2. OBJECTIVES OF THE FIRM
th of their owners (shareholders) and that market prices balance returns against risk. However, complex corporate objectives may exist in practice. Many analysts view profitability as the single most important measure of business performance. <span>Without profit, the business eventually fails; with profit, the business can survive, compete, and prosper. The question is: What is profit? Economists, accountants, investors, financial analysts, and regulators view profit from different perspectives. The starting point for anyone who is doing profit analysis is to have a solid grasp of how various forms of profit are defined and how to interpret the profit based on these different definitions. By defining profit in general terms as the difference between total revenue and total costs, profit maximization involves the following expression: Equation (1


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