Sales Management Marketing Financial Analysis Review - Topic 6.
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Transcript of Sales Management Marketing Financial Analysis Review - Topic 6.
Sales Management
Marketing Financial Analysis Review - Topic 6
What Accounting Does & Does Not Teach
Cash Flows Are Essential for Sales Managers
Remember the Marketing Concept
Profit Equation
• Profits = Revenues – Costs• Revenues = Price * Quantity Sold• Costs = (unit cost * unit sold) + fixed costs
• Sales Costs can be variable, fixed, or single lump sum
Breakeven
• Breakeven = Fixed Costs / Unit Contribution• Unit Contribution = Unit Price – Unit Cost
Breakeven 2
• But we usually want to make at least as much money as before. So….
• Breakeven = (Past Profit + Fixed Costs) / UC• Or • Breakeven = (Target Profit + FC) / Unit Cont.
Total Contribution
• Total Contribution (or total dollar contribution) = total direct revenues – total direct costs
• This is harder to determine than you expect• Essential to what marketers do, can control,
and what their expectations are
Joe the Salesperson Example
Contribution Reminder
• Unit Contribution is not Total Contribution• Be sure to use all of this terminology correctly
• MONEY IS SERIOUS!
Relevant Costs
• Sunk Costs• Relevant Cost Fallacy
Risk is Relative
Income Statement Review
• Look at example in notes
Balance Sheet Example
• Look at note example
Companies Keep Multiple Sets of Books
Profit Does Not Equal Cash
• Profit is an Opinion• Cash is a Reality