What would happen if a companies profits just stayed the same over a period of quarters? I obviously don’t understand it at all but isn’t it just unsustainable to expect growth indefinitely?
In: Economics
To attract investors, you need to prove that you can grow earnings. Companies are valued based on their future earning potential; if they expect to be more profitable in the future, they’re worth more today, not when the future profits are realized.
So in order to simply maintain value, you need to continue to grow (continue to prove future earnings increases), and to increase value you need to grow even more.
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