Investors use customer acquisition costs (CAC) to determine if a company is _______.

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Multiple Choice

Investors use customer acquisition costs (CAC) to determine if a company is _______.

Explanation:
Customer acquisition cost shows how much a business spends to win a single customer, and investors use it to judge profitability by considering how much value that customer will generate over time. When CAC is low relative to the revenue or lifetime value (LTV) of a customer, the unit economics are favorable, meaning each customer contributes to profits and growth can be sustainable. If CAC is high compared with LTV, profitability becomes doubtful even if customer numbers grow. So CAC is used to determine if a company is profitable.

Customer acquisition cost shows how much a business spends to win a single customer, and investors use it to judge profitability by considering how much value that customer will generate over time. When CAC is low relative to the revenue or lifetime value (LTV) of a customer, the unit economics are favorable, meaning each customer contributes to profits and growth can be sustainable. If CAC is high compared with LTV, profitability becomes doubtful even if customer numbers grow. So CAC is used to determine if a company is profitable.

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