‘Profit is not the legitimate purpose of business. The legitimate purpose of business is to provide a product or service that people need and do it so well that it’s profitable.’
James Rouse, US real estate developer, civic activist and philanthropist
Profit is often thought to be the main purpose of a business. However, even more important is the amount of profit relative to the investment required to generate that profit.
Therefore, return on investment, as opposed to profit alone, is a superior measure of commercial success.
To achieve long-run viability a business must ensure that its return on investment is greater than its cost of finance.