One Potential Downside of Promotions Is That a Short-Term Gain

question 36

True/False

One potential downside of promotions is that a short-term gain may actually be offset by a drop in future sales.

---

Definitions:

Loss

The result when a company's expenses exceed its revenues during a specific period, leading to a negative net income.

Operating Cycle

The average time period between the acquisition of materials for production and the receipt of cash from sales of the finished goods, critical for managing cash flow.

Current Liabilities

Financial obligations that a company is expected to pay within one year.

Liquidity

The ability to pay current obligations.