Profitability and Risk are the most prominent issues nowadays that almost every big corporate houses face. It is true that the goal of every business houses is to make profit. But too much attention towards making a profit might lead to tremendous risk of diluting the liquidity position of the company.
In simple words can say that there is a tradeoff between profitability and risk. Profitability is the relationship between revenues and costs by using the firm's assets. Risk is the danger the firm will be unable to pay its bills due.