What is a loss making firm:

A loss-making firm is a business that incurs more expenses than revenue over a given period, resulting in a financial loss. This means its costs such as production, operations, salaries, and other expenses exceed the income it generates from sales or services.

Reasons a Firm May Be Loss-Making:

• High Operating Costs – Expenses outweigh revenue.

• Low Sales or Revenue – Weak demand, competition, or poor pricing strategy.

• Economic Downturns – Recessions or market instability.

• High Debt Levels – Interest payments reduce profitability.

• Inefficiency or Poor Management – Poor decision-making, waste, or misallocation of resources.

THE END