Miles M.

Yordan

BSBA Marketing Management 2nd Yr.

MKT 104B

STUDY QUESTIONS:

1. Why does a retailer need to use multiple performance measures to evaluate its performance?
2. Buyer’s performance is often measured by their gross margin percentage. Why is this measure
more appropriate than net profit percentage?
3. How does the strategic profit model assist retailers in planning and evaluating their marketing
and financial strategies?

Answers:

1.
2. It is an important measure in retailing because it indicates how much profit the retailer is
making on merchandise sold, without considering the expenses associated with operating the
store and corporate
3. Some financial performance measures are used to evaluate different aspects of a retailing
organization. Although the return-on-assets ratio in the strategic profit model is appropriate
for evaluating the performance of the retail executives responsible for managing the firm,
other measures are more appropriate for more specific activities. For instance, inventory
turnover and gross margin are appropriate for buyers, whereas store managers should be
concerned with sales or gross margin per square foot or per employee.
 Solve
Answer:

A. Gross Margin

Formula: GM = NS(Net sales) – CGS(Cost of Goods Sold)

Solving Net Sales

NS=GS(gross sales)+PA(promotional allowance)

=P34,500.00+P1,500.00

NS=P36,000.00

GM=NS-CGS

=P36,000.00-P23,400.00

GM = P12,600//

B. Net Profit Before Tax

Formula: NPBT=GM(Gross Margin) – (OPEX(Operating Expense)-II(Interest Income)

NPBT=GM-(OPEX-II)
=P12,600.00-(P9,750.00-P350.00)
=P12,600.00-P9,400.00
NPBT= P3,200.00//

C. Net After Profit Tax

 Formula: NBPT-T(tax)

NAPTX=NAPT-T
=P3,200.00-P790.00
NAPTX=P2,410.00//

D. Gross Margin Percentage

Formula: GMP=GM(Gross Margin)/NS(Net Sales)

GMP=(GM/NS)*100
=P12,600.00/P36,000.00
=0.35*100
GMP=35%//

E. SGA as of % sales
Formula: SGA=OPE(Operating Expense)/NS(Net Sales)*100

SGA=P9,750.00/P36,000.00
=0.27*100
SGA=27%

F. Operating Profit Margin %

Formula: OPM=NI(Net Income)/NS(Net Sales)
Solving Net Income
NI=NS-CSG-OPE
= P36,000.00-P23,400.00-P9,750.00
NI=P2850.00

OPM=NI/NS
=P2,850.00/P36,000.00
=0.0791666*100
OPM=7.9%//
G. Net Profit Percentage after Taxes
Formula: NPPAT=NAPT/NS*100

NPPAT=NAPT/NS
=P2,410.00/P36,000.00
=0.0669*100
NPPAT=6.7%//

H. Profit Margin %
Formula: PMP=NI/NS*100
Solving Net Income

NI=NS-(CGS+OPEX+T)
=P36,000.00-(P23,400.00+P9,750.00+P790.00)
=P36,000.00-P33,940.00
NI=P2,060.00

PMP=NI/NS*100
=P2,060.00/P36,000.00
=0.057222*100
PMP=5.7%//