With Regard to Customer Defection, Which of the Following Statements

question 56

Multiple Choice

With regard to customer defection, which of the following statements is incorrect?

• A)Defection rates are determined by customer loyalty.
• B)The longer a company holds on to a customer, the greater is the volume of customer-generated unit sales.
• C)Lowering customer defection rates allows a company to achieve a lower cost structure.
• D)The longer a company retains a customer the higher the average unit cost of each sale.
• E)There is a positive relationship between the length of time that a customer stays with the company and profit per customer.

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Definitions:

Cost of Goods Sold

The direct expenses related to the manufacturing of products that a company sells.

Current Ratio

A liquidity measure that evaluates a company's ability to pay short-term obligations, calculated as current assets divided by current liabilities.

Liquidity Ratio

A financial metric used to determine a company's ability to pay off its short-term liabilities with its existing assets.

Accounts Receivable

Accounts Receivable is an asset account on the balance sheet representing money owed to a business by customers for goods or services delivered on credit.