মাসিক আত-তাহরীক The differences between interest and profit
Some people consider interest and profit as one and the same. They hesitate not to say that ‘Interest is as like as profit’. To clear the misconception differences between interest and profit are briefly discussed below.
(a) Money paid by the debtor in excess to the original amount of credit is called interest, while profit is the difference between the cost of production and price of the goods and services.
(b) Interest is prefixed while profit is post-earned.
(c) There is no risk and uncertainty in interest. On the other hand, in any business initiatives there remains always a possibility of profit or loss. In this circumstance, the entrepreneur has to face the risk and uncertainty.
(d) Interest can never be negative, may be very low or at best theoretically zero. But profit is positive, can be zero or even be negative (i.e. loss).
(e) In interest, the financier does not invest his effort and labour. But profit is the result of effort and labour of the entrepreneur.
