Business – 10.2 Analysis of published accounts – Profitability ratios | e-Consult
10.2 Analysis of published accounts – Profitability ratios (1 questions)
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Advantages:
- Can increase sales volume, potentially offsetting lower margin per unit.
- May attract price‑sensitive customers and expand market share.
Disadvantages:
- Reduced profit margin per unit; if volume increase is insufficient, total profit falls.
- Risk of price wars and damage to brand perception as a low‑price provider.
- Existing customers may expect future discounts, eroding long‑term profitability.