Chapter 10.1, Problem 1R

To determine

To state: Importance of financing, cost-benefit analysis, revenue and profits.

Answer to Problem 1R

Finance helps the firms to wisely utilize their money. Cost benefit analysis helps to choose a better option for a business by analyzing the benefit caused from a particular cost.

Explanation of Solution

Business means production and distribution of goods and services to comply to the needs of consumers. For an efficient working of a business, finance is the key factor. The channelization of funds, profit coming to the company, daily flow of cash, etc are all aspects of financing. Finance helps the firms to wisely utilize their money.

Cost benefit analysis helps to choose a better option for a business by analyzing the benefit caused from a particular cost. If the benefit is high from less cost, one would choose that option otherwise would go for the other one.

Revenue is the total income earned by a company through sale of goods and services.

Profit is the net income earned by the company after subtracting all the expenses and other costs from the revenue.

Economics Concept Introduction

Introduction: Business means production and distribution of goods and services to comply to the needs of consumers. For an efficient working of a business, finance is the key factor.