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Abrar

0450-21-O-N-11-3c

Hadia

TOPIC QUESTION - PAPER 1

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Hadia

March 12, 2026 at 11:11:18 AM

May/June 2022

Version 3

1.0 Understanding Business Activity

1.1 Business Activity

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YOUR ANSWER

Profit can be reinvested into the business to be used for expansion. Since the objective of SBG is to grow, SBG could use that retained profit to open more factories or develop new prototypes for its specialist paints. This allows the business to expand without the need for loans or other external sources of finance, making it an affordable source of finance for long-term growth.
Profit also acts as a key indicator for success and performance of the business. For a larger business like SBG, achieving profit shows that the business's current strategies are working effectively. It also ensures that the revenue made is covering the cost of sales and leaving behind plenty reward for the owner, making sure that the business is not headed towards failure.

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