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It won’t let me ask this question in the marketing section. So if you can somehow help me with that... thank you...In​ 2014, Company A reported profits of about ​$52 billion on sales of ​$251 billion. For that same​ period, Company B posted a profit of about ​$22 billion on sales of ​$85 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' income 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 each company.This is all the information I was given.Company A Company BSales $250,670,000 $84,541,000Gross Profit $68,872,000 $54,597,000Marketing Expenses $8,421,750 $14,972,100Net Income (Profit) $52,138,000 $21,705,000

Question

It won’t let me ask this question in the marketing section. So if you can somehow help me with that... thank you...

In​ 2014, Company A reported profits of about ​$52 billion on sales of ​$251 billion. For that same​ period, Company B posted a profit of about ​$22 billion on sales of ​$85 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' income 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 each company.
This is all the information I was given.
Company A Company B
Sales $250,670,000 $84,541,000
Gross Profit $68,872,000 $54,597,000
Marketing Expenses $8,421,750 $14,972,100
Net Income (Profit) $52,138,000 $21,705,000

check_circleAnswer
Step 1

We are required to calculate various ratios. 

Profit margin is calculated by dividing Net profit by Net sales and is expressed in percentage

 

Company A

Company B

Net Profit (a)

$52,138,000

$21,705,000

Sales (b)

$250,670,000

84,541,000

 

 

 

Net profit margin (a/b)

20.80%

25.67%

So, we find that the profit margin of Company B is higher than Profit margin of company A

Step 2

Now, we shall calculate the net marketing contribution

The net marketing contribution is calculated by subtracting the marketing expenses from the Gross profit of the companies.

  

 

Company A

Company B

Gross Profit (a)

$68,872,000

$54,597,000

Marketing expenses (b)

$8,421,750

$14,972,100

 

 

 

Net marketing contribution (a-b)

$60,450,250

$39,624,900

 

So, we find Company A has a higher Net marketing contribution than Company B

Step 3

Next, we shall calculate the marketing return on sales.

It is calculated by dividing the marketing contribution by the net sales of the company.

 

Company A

Company B

Net marketing contribution (a)

$60,450,250

$39,624,900

Sales (b)

$250,670,000

84,541,000

 

 

 

Marketing return on sales (a/b)

24.11%

46.87%

 

Hence, we find that the Marketing return on sales of Company B is higher than mar...

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