The Ability To Provide Financial Rewards To Attract And Retain Financing Is Called

The correct answer is (C) Profitability, as due to it the company is able to give benefits, incentives to its employees and meet the cost of running the business. The Profit is obtained after deducting Expenses from Revenues.

The company is able to finance different projects of the business after meeting all the expenses of the business. Such company can attract and convince investors to invest in the business as due to profitability, the company / corporation is in a position to distribute its share of return to its shareholders / stockholders. It shows the financial performance of the company during the accounting period that how well it is able to get profits from its revenues, resources and equity after meeting all the relevant expenses i.e., how well the company is utilizing its resources to get profits.

Profitability is important for the company’s business to finance its various business activities in order to run the business, to Stabilize The Business and to grow & expand it during the accounting period. It affects financial decision of finance manager such as whether to finance a project or not. Due to increase in profitability, the finance manager should be looking for the utilizing the cash in this project, otherwise, should not finance that project.