Question

metrics

In 2013, Company A reported profits of about $13 billion on sales of $28 billion. For that same period, Company B posted a profit of about $692 million on sales of $3.6 billion. So Company A is a better marketer, right? Sales and profits provide information to compare the profitability of these two competifors, but between these numbers is information fegarding the efficiency of marketing efforts in creating those sales and profits. Using the following information from the companies' incomes statements (all numbers are in thousands), calculate profit margin, net marketing contribution, marketing return on sales (or marketing ROS), and marketing return on investment (or marketing ROI) for both companies. Which company is performing better? Company B $3,569,700 $505,000 $427,800 Company A Sales $28,324,800 $8,292.200 $1,197 200 Gross Profit Marketing Expenses Net Income (Proft) $12.684,700 $691,800 Fill in the table below (Round the NMC to the nearest whole number and all other values to one decimal place) Company A Company B % Profit Margin

Answer 1

Fig.in "000s	Co.A	Co. B
1.Sales	28324800	3569700
2.Gross profit	8292200	505000
3.Marketing expenses	1197200	427800
4.Net income(profit)	12684700	691800
Profit margin
(Net Income/Sales)(4/1)
12684700/28324800=	44.8%
691800/3569700=		19.4%	Company A's P/M > Co.B's
Net marketing contribution
Gross profit-Mkg. Expenses)
8292200-1197200=	7095000
505000-427800=		77200
Marketing return on sales(Mkg. ROS)
Net marketing contribution/Sales
7095000/28324800=	25.0%
77200/3569700=		2.2%	Company A is better than Co. B
Marketing return on Investment(Mkg. ROI)
(Gross profit-Marketing expenses/inv.)/Marketing expenses/Investment
(8292200-1197200)/1197200=	5.9
(505000-427800)/427800=		0.2	Company A earns better Return on its invetsment in mkg. Than Co. B
Co. A's performance is better than Co. B