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customer profitability analysis


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(CPA)

The analysis of profits by customer. In the past, management accounting reports focused exclusively on product profitability, but in recent years it has become clear that managers need to understand both product and customer profitability. Typically, organizations that introduce CPA discover that a relatively small number of customers account for most of the profit; identifying profitable customers can therefore be very important. See also lifetime value.

Subjects: Accounting.


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