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Business homework question please help?!?

  • Business homework question help please!? Would it matter if Nigel's business did not make a profit during its first year of trading?

  • Answer:

    While the question states that the Nigel's business does not make a profit it is not stated that the Company does not achieve its break-even point and as such it could be deduced that the company doesn't make a loss either. However statistically most businesses do not make a profit in their first year of trading and as such it may be nothing to worry about. However the fact that the company hasn't made a profit may impact its chances of getting external sources of finances by lowering its credit rating.

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Depends what "matter" means. Of course it "matters", as you always want to make a profit, especially if you want to attract investors. But it's not necessarily critical; a lot of companies are unprofitable in their first year.

-j.

A business lives of profit. You need to setup cashflow projections. If the business is using the money efficiently, then is good. However, if the business is losing money, then it matters a lot!

jcgonzmo

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