What is one consequence of sustained losses for a firm?

When a firm experiences sustained losses, one major consequence is that it may be forced to close. This is primarily due to the fact that continuous financial losses undermine the firm's ability to meet its obligations, such as paying employees, suppliers, and other operational costs. Over time, if a firm cannot turn its financial situation around to become profitable, it risks exhausting its financial resources, which could lead to bankruptcy or liquidation.

In contrast, increased investment opportunities, attracting more workers, or expanding operations are generally not feasible outcomes when a firm is struggling financially. Instead, sustained losses typically signify instability and can lead to decreased confidence among investors and employees alike. Hence, the prospect of closure becomes increasingly likely as losses continue to accumulate.