Profit plays an important role in the existence of business due to the following reasons:

1. Survival:

It helps the business to continue to exist in the market, by meeting the expenses.

2. Expansion and growth:

Profit helps the business to increase the scale of its operations and then grow to the new heights.

3. Index of performance:

Profit is used to judge the performance and efficiency of the business, as more profits indicate better performance and increased efficiency.

4. Reward for bearing risk:

Since no business can exist without risk, the burden of bearing risk is compensated and justified by earning profits.

5. Creation of goodwill:

By earning profits business is able to build reputation in the market and attract new parties like employees, customers, investors etc.

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