Question

QUESTION 8 A marketing manager's performance would most likely be evaluated by which ratio below? days sales outstanding (average collection period) cash ratio total asset turnover quick ratio

Answer 1

Answer: Option-(c): total assets turnover ratio Reason: In a business firm, marketing activities include sales, promoting products, expanding market for products, serving customers effectively through after-sales service, customer grievance addressal, etc. It is observed clearly that the marketing activities are purely customer and consumer market-oriented. Therefore, a marketing manager's performance must be evaluated using market performance ratios and marketing manager must make sure that sufficient sales revenue is generated so that firm's all assets are utilized effectively. So, option-(c): total assets turnover ratio is the correct answer. Option-(a): average collection period is incorrect because it explains how many days firm takes to collect its receivables which deals with evaluating firm's ability to collect cash as early as possible. It is also not a market-oriented ratio as it is a working capital management ratio. Option-(b): cash ratio is incorrect because it is the ratio of cash balance to current liabilities which deals with evaluating firm's liquidity position whether firm maintains sufficient cash to meet its immediate obligations. It is not a market-oriented ratio as it is a working capital management ratio. Option-(d): quick ratio is incorrect because it is the ratio of quick assets to current liabilities which deals with evaluating firm's liquidity position whether firm maintains sufficient quick assets that can be converted into cash as quickly as possible to meet its immediate obligations. It is also not a market-oriented ratio.