@parklinkz – I’ve often wondered about that, too. It seems perfectly logical that a person’s annual profit would only be what he or she has left over at the end of the year. But, we don’t look at things that way because a company’s finances are different from a person’s finances.
A company has shareholders, employees, and partners it must be financially accountable to. It has to pay its employees, create a return for its shareholders, and so forth. It also has to prove that it is a thriving organization so it can get loans, investors, and so on.
The only true way to tell that a company is healthy is to look at its net profits over time, hence the annual financial reports.
On the other hand, a person is only accountable to herself and her family (if she has one). In most cases, a person doesn’t have to prove that they’re making more money each year. He or she just has to keep the bills paid and provide the necessities of life.