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Marketing Strategy There are 3 key measures to watch when analyzing the income statement: gross margin percent, expense ratio, and return on sales. Since each
Marketing Strategy
There are 3 key measures to watch when analyzing the income statement: gross margin percent, expense ratio, and return on sales. Since each of these measures is a percent of revenue, they can be compared over time to identify problems and improvements in margins, or they can be used to check the efficiency of a firms marketing.
Here are the calculations:
Create a spreadsheet showing the income statement for a company that had the following results last period.
Item
Units Sold
Unit Cost
Price
Advertising
Consumer Promotion
Personal Selling
Dealer Promotion
Product Development
Value
100,000
$40
$90
$1,500,000
$1,800,000
5 salespeople @ $80k each
$1,200,000
$700,000
1. What is the gross margin percent for the period?
2. What is the expense ratio?
3. What is the return on sales?
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