Loss-Causing Customers

question 88

Multiple Choice

Loss-causing customers:

• A)should be dropped
• B)should be evaluated for ways to become profitable customers
• C)should be retained because each customer adds to long-run profitability
• D)do not exist because additional customer sales always increase profits

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Definitions:

Return on Investment

A financial ratio that calculates the percentage gain or loss on an investment relative to the cost of the investment, indicating the efficiency of the investment.

Investment Turnover

The ratio of sales to invested assets.

Profit Margin

A financial metric, calculated as net income divided by revenue, that indicates the percentage of sales that exceeds the costs of goods sold.

Return on Investment

A performance measure used to evaluate the efficiency or profitability of an investment, calculated by dividing net profit by the cost of the investment.