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 (al 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 A $37,254,600 $3,172,900 $7,167,900 $1,347,6 $7,870,200 Company B Sales Gross Profit Marketing Expenses Net Income (Profit) $723,300 S391,400 $208,200 00 Fill in the table below. (Round the NMC to the nearest whole number and all other values to one decimal place.) Company A CompanyB Profit Margin

Explanation / Answer

Profit margin = Net Profit / Sales

Profit margin for Company A

= 7,870,200 / 37,254,600

= 0.21 or 21%

Profit Margin for Company B

= 208,800 / 3,172,900

= 0.065 or 6.5%

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