Eastern Manufacturing Products Inc.

To date, Eastern has been a one$-$product company. It manufactures, sells, and services only one product, AM$-$FM radios, and that item is in the market$-$saturation stage of its product life cycle. As a result, Eastern$$s profits are declining due to increased competition from new products and competing firms.

For several reasons, attempts to develop and introduce new products have not been successful.

How would you expect this situation to affect the assessment of Eastern$$s financial condition and performance?

Its one$-$product strategy increases Eastern$$s efficiency and will ensure its long$-$term financial success. Although its profits are declining now, these efficiencies will ensure the company$$s long$-$term success.

Although nonquantitative factors may be relevant to a company$$s financial evaluation in general terms, the details of this specific situation are not relevant to the firm$$s financial condition or performance.

Eastern$$s profits will continue to decline, and the company$$s survival is in jeopardy if it does not create a new product with more potential for market growth.