Two calculations that can be made to measure customer profitability are
A)Customer net profit and customer earnings per share.
B)Times revenue earned per customer and customer revenue margin.
C)Customer net profit and customer profit margin.
D)Customer revenue margin and customer profit margin.

Question

Quizplus · Accepted Answer

Customer net profit is the difference between the revenue generated by a customer and the costs associated with serving that customer. It gives a direct measure of how profitable a customer is. Customer profit margin, on the other hand, is the ratio of customer net profit to customer revenue. It gives a percentage value of the profitability of a customer, and allows for easy comparison across customers regardless of their size. These two measures together provide an accurate picture of customer profitability. Option A is incorrect because earnings per share is a measure of shareholder profitability, not customer profitability. Option B is incorrect because "times revenue earned per customer" is not a commonly used metric for customer profitability.

Two Calculations That Can Be Made to Measure Customer Profitability