Being 'Stuck in the Middle' Gives Low Profits Because

question 57

Multiple Choice

Being 'stuck in the middle' gives low profits because:

• A)The firm loses those customers who want the lowest prices
• B)The firm loses those customers who want the best product on the market
• C)Employees become confused what the firm's goals and strategy really are
• D)All of the above

---

Definitions:

Net Profit Margin

A financial ratio that shows the percentage of net income generated from total revenue.

Gross Margin

The difference between sales revenue and the cost of goods sold, representing the profitability before deducting operating expenses.

Return On Total Assets

A financial ratio that measures the net income produced by total assets during a period by comparing net income to the average total assets.

Return On Equity

A measure of financial performance calculated by dividing net income by shareholders' equity, indicating how well a company uses investments to generate earnings growth.