In 2013, Company A reported profits of about $8 billion on sales of $37 billion.

Question

In 2013, Company A reported profits of about $8 billion on sales of $37 billion. For that same period, Company B posted a profit of about $208 million on sales of $3.2 billion. So Company A is a better marketer, right? Sales and profits provide information to compare the profitability of these two competitors, but between these numbers is information regarding 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 ROl) for both companies. Which company is performing better? Company A $37,254,600 $3,172,900 $7,167,900 $1,347,600 $7,870,200 Company B Sales Gross Profit Marketing Expenses Net Income (Profit) $723,300 $391,400 $208,200 Fill in the table below. (Round the NMC to the nearest whole number and all other values to one decimal place.) Profit Margin NMC Marketing ROS Company A 21% $5,820,300 Company B 6.5 % $331,900

Explanation / Answer

Solution :

Profit margin = Net income / sales x100

Company A = $7,870,200 / $37,254,600 x100 = 21.1%

Company B = $208,200 / $3,172,900 x100 = 6.6%

NMC

Company A $5,820,300

Company B $331,900

Marketing ROS = NMC / Sales x100

Company A = 5,820,300/37,254,600 x100 = 15.6%

Company B = 331,900/ 3,172,900 x100 = 10.5%

Marketing ROI = NMC / Investment x 100

Company A = $5,820,300 / $25,434,300x100 = 22.9%

Company B = $331,900 / $2,841,000 x100 = 11.7%

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.