Do The Math Workbook PDF

This workbook belongs to _________________
Record # _____ Team # ____
"Do the Math"

Student
Workbook
By Karen Sinotte
Summer 2017
Do the Math Workbook for Marketing by Karen Sinotte Summer 2017

Table of contents
Table of contents ........................................................................................................................................... 2
Your Grade Tracker: ..................................................................................................................................... 2
Introduction..................................................................................................................................................... 3
Weekly Reflections........................................................................................................................................ 4
Worksheet 1: Marketing Management Review ......................................................................................... 5
Worksheet 2: Reviewing Financial Statements ........................................................................................ 8
Worksheet 3: Financial Situational Analysis ...........................................................................................12
Worksheet 4: Forecasting and Budgeting ...............................................................................................14
Worksheet 5: Breakevens and Pro-formas .............................................................................................17
Worksheet 6: Tough Guy Sports Case ....................................................................................................20
Part I: Defining the Business Problem................ 20
Part II: Tough Guy Sports Case, Setting Goals and Considering Alternatives 24
Part III: Tough Guy Sports Case Selling the Plan 26
Worksheet 7: Pricing Decisions ................................................................................................................27
Worksheet 8: Financial Analysis to Inform Decisions ............................................................................31
Week 10: Practice Case Worksheet.........................................................................................................37
Week 11: Case 1 Worksheet .....................................................................................................................39
Week 14: Exam Review .............................................................................................................................45
Getting Ready Checklist? ..........................................................................................................................45
Your Grade Tracker:
Assessment Tool: Description: % of Final Your Grade
Grade:
Midterm and Final Multiple choice, Short Answer and Case Wk
Exams incidence 9 /10
40
Need to pass combined total of 15 /30
BOTH to pass the course.
Assignments/ 8 weeks of individual and group learning Week Act/Quiz
participation activities weighted totalling 4% each 1 /2
week. Only 2% in week 1. Announced in 2 /4
Weeks 1-7 and week 10 3 /4
30 4 /4
Students can earn up to 1 mark for missed classes 5 /4
weeks 1 to 10 if homework is submitted BEFORE 6 /4
class or team meeting.
7 /4
10 /4
Group Case Analysis Three group case analyses weighted at Week Activity
10% each. 11 /10
Announced in Weeks 11, 12 and 13 12 /10
30 13 /10
For case work, students can earn up to 2 marks for
missed class if individual case work is submitted
BEFORE class or team meeting.
100%

Introduction
By the end of this course you will be able to evaluate the financial impacts of marketing recommendations
and present these recommendations in a persuasive manner to sell your ideas.
Topic Topics Work sheet Starting
level
1. Marketing Frameworks and how to use them to make Market 1
marketing mix decisions share
2. Calculating market share and market growth to be used in 1
forecasting and financial analysis
3. Financial Statements: The math and components of Balance Financial 2
Sheet and Income statement Statements
4. Financial Analysis of Statements: The math and drivers of Financial 3, 6
financial ratios including Liquidity, Solvency, Ratios
Efficiency/Profitability, Effectiveness overall, marketing
effectiveness in particular
5. By understanding the drivers of ratios, assess the relative 3, 6
values of different industry benchmarks.
6. Assess the strengths and weaknesses of company’s financial 3, 6
performance, using trend in financial ratios and benchmarks.
7. Calculate change in Gross Margin when price or product 3, 4, 5, 6
changes, especially when you don't have quantity, selling
price or VC per unit.
8. Describe the pros and cons of different forecasting methods. Forecasting 4
and
9. Describe the pros and cons of different budgeting methods. Budgeting 4
10. Complete an estimation question using market factors using 4

the chain ratio analysis format.
11. Estimate the profit impact of a marketing strategy given a Pro-formas 5,6,7, 8
sales target and a change in marketing mix. Report in Pro- and
forma Income statement format. breakeven
12. Estimate the profit impact of a pricing strategy. Report in 7
Pro-forma Income statement format.
13. Assess the risk of a marketing strategy using breakeven and 5, 6, 7, 8
Margin of Safety.
14. Names the five Cs of pricing and use these to inform pricing Pricing 7
decisions.
15. Assess the likely elasticity of demand for a given product 7

category.
16. Describe various pricing strategies and the objective that 7

might be achieved by using these pricing strategies
17. Describe and implement the 5 step case process Cases Case
worksheets
Process

Weekly Reflections
We Weekly Thoughts (What did you learn, what challenges did you overcome, What still worries you,
ek what questions do you have, any AHA moments)
1
10
11
12
13
14
15

Worksheet 1: Marketing Management Review
Part A: Terminology
1. The Terminology of Marketing Planning and Measuring Marketing Success
Define these key terms and be able to apply them appropriately in the marketing planning process.
[TIP: Resources to help with terminology include your MARK 1027 textbook and the internet].
Throughout this course, we will be using the These Key Performance Indicators are used to
following marketing frameworks that can be used measure the success of these marketing decisions.
to help assess marketing strategy decisions. There are measures of Efficiency (doing things right)
and Effectiveness (doing the right things)
Marketing Frameworks Marketing Measures of Success

1. AIDA Model 1. Advertising as Percentage of Sales (%)
2. BCG Matrix 2. Average sale per customer ($ or #)
3. Brand 3. Brand Awareness
4. Consumer Decision Process 4. Brand Development Index (BDI)
5. Diffusion of Innovation
6. Macro Strategies for Sustainable 5. Brand Value
Competitive Advantage 6. Conversion Rate (%)
7. Marketing Mix (4Ps vs. 7Ps) 7. Cost per Sale ($)
8. Perceptual Map 8. Cross Sell
9. PEST Analysis 9. Customer Equity
10. Porters 5 Forces Model 10. Customer Acquisition
11. Positioning (3 Cs) 11. Customer Profitability
12. Price Quality model 12. Customer Retention (or Attrition Rates)
13. Pricing Strategies (5 C's)
14. Product Life Cycle 13. Customer Satisfaction
15. Product Market Growth (Ansoff) 14. Gross Rating Point (GRP)
Model 15. Lifetime value of customer (LTV or CLV)
16. Profit Drivers (Cost/Revenue
Framework) 16. Market Development Index (MDI)
17. Promotional Planning 17. Market Growth (%∆)
18. STP Process
18. Market Share (SOM or M/S)
19. Strategic Marketing Planning
Process 19. Net Promoter Score (NPS)
20. SWOT Analysis 20. Recency Frequency Monetary Score (RFM)
21. Repeat Purchase Ratio
22. Response Rate (RR)
23. Return on Marketing Investment (ROMI)
24. Sales Growth (%∆)
25. Share of Voice (SOV)
26. Share of Customer (SOC)
27. Share of Wallet (SOW)
28. Social Return on Investment
2. Describe how marketing success is measured?

3. Give at least 4 ways to grow market share?
4. Pros and Cons of growing market share, Give 4 of each.

Pros Cons
PART B: Practicing the Math Sales Growth and Market Share (Show your work)
1. From your Job Aid to fill in the equations that you need:
Calculating New Sales ($) Calculating Sales Growth Rate (%) Calculating Market Share
2. In 2012, total market is $1,000,000 with three competitors - Acme, Beta and Delta. The market grows
to $1,200,000 in 2013. By 2014, the market has grown to $1,500,000 which attracted a fourth
competitor to the market. In 2014, Blue Nose generated $100,000 in sales, both Delta and Beta grew
at the same rate in 2014 as they did in the previous year.
a. Fill out the chart below.
($000) 2012 2013 2014
Market Market % Sales Market % Sales
Company Sales Share% Sales Share Change Sales Share % Change
Acme $ 500 23%
Beta $ 300 30% $ 345
Delta $ 200 20% 20%
Blue Nose n/a n/a n/a n/a n/a $100 n/a
Industry Total $ 1,000 100% $ 1,200 100% $1,500 100%
b. Answer the following questions from the chart above

i. What does this analysis tell you about the
companies in this market?
ii. Compare the advantages and
disadvantages of large vs. small market
share.
iii. How might a company grow market share?
Consider the financial impacts of changes in
marketing mix.

3. Bottled water, consisting of still and sparking unflavoured and flavoured waters, is a hot industry - sales
grew by 8.8% between 2001 and 2006 and are expected to grow another 8.5% by 2011. The bottled
water industry in North America totalled 32.4 Billion litres valued at US $15.6 B in 2006 - that's an
average of $0.48 in revenue per litre. Big players in this industry include Nestle, PepsiCo, and Coca Cola.
Nestle is the market leader, selling 9.58 B litres, followed by PepsiCo's 4.3 B litres and Coca-Cola's 3.74 B
litres
a. Calculate 2006 market share for each of the
three major players.
b. How much revenue did one market share

point represent in 2006? How much will 1%
market share represent in 2011?
4. The manager of Haliburton Highlands Golf Course understands from industry data that the courses in the
market area together host 30,000 rounds of golf a year. Of these rounds. Haliburton Highlands Golf
Course hosts 3,500 rounds which represents an 8% increase over last year. From www.ngf.org found
out that the rounds up 6.1% through November 2012 and is expected to increase by 6% next year.
a. Calculate market share this year.
b. Calculate next year's market share if

Haliburton Highlands Golf Course was to
project a 7% increase in sales next year, while
the market is growing by 6% next year.
c. How might Haliburton Highlands Golf Course
grow their business next year?
d. How might you compare your performance

relative to other players in the market place?
5. The owners of Molly Maid Housekeeping services serves houses and condominiums on Toronto's
Harbourfront. This area includes approximately 5,500 homes. However, it is estimated that only 35%
are potential customers because they currently engage maid services in their homes or may do so in the
future. The company currently cleans 225 homes. Toronto's Harbourfront is currently experiencing a
building boom. There will be 2,500 additional units built in the next 3 years.
a. Calculate market share this year.
b. How might you forecast what will happen to

Molly Maid's business in the next three years?

Worksheet 2: Reviewing Financial Statements
Part A: Terminology of Financial Statements: Define these key terms and identify them on a financial
statement. For each item, indicate which statement they belong to: Balance sheet (BS) or Income
Statement (IS) and Item Type: Fixed Assets = FA, Current Assets = CA, Intangible Assets = IA, Current
Liabilities =CL, Long Term Liabilities = FL, Equity = EQU, Revenue = R, Variable Expenses = VC or Fixed
Expenses = FC.
Item Statement Item Type
1. Accounts Payable
2. Accounts Receivable
3. Accumulated Depreciation
4. Administrative salaries and benefits
5. Advertising Costs for GroupOn Offer
6. Advertising Expenses
7. Bank Charges/Fees
8. Brand Value
9. Cash
10. Closing Inventory
11. Cost of Goods Sold
12. Depreciation Expense
13. Equipment
14. Goodwill
15. Hourly labour for factory line workers
16. HST Paid
17. Insurance
18. Interest Income
19. Inventory
20. Merchant credit card processing
21. Miscellaneous Expenses
22. Mortgage Owed
23. Mortgage Payment
24. Notes Payable
25. Office rent
26. Opening Inventory
27. Outbound Telemarketing
28. Owners’ equity
29. Package design
30. Packaging materials
31. Plant electricity
32. Premium Costs for Gift with Purchase
33. Pre-Paid expenses
34. PST Collected but not yet paid
35. Purchases

Item Statement Item Type
36. Retained Earnings
37. Revenues
38. Salaries Expenses
39. Sales
40. Salesmen commission
41. Shareholder's Equity
42. Stocking Fee
43. Telephone Expenses
44. Transportation Costs
45. Travel Costs
46. TV media Expenses
47. Variable Expenses
48.
49.
Be able to sort these items in Liquidity order on the Balance sheet and separate Variable vs. Fixed
expenses on the income statement
Assets Liabilities Equity Variable Fixed Expenses
(Thing that you OWN) (Things that you (What you OWE to Expenses (expenses PAID that
OWE to creditors) shareholders/ owners) (expenses PAID that don't change
change proportionate proportionate to
to change in sales) change in sales)

Part B: Practicing the Math (Show your work)
1. (A) Create financial statements in correct format from the
list of items provided. Record on blank sheet of paper. (a) 1 Accounts Payable $ 3,000
Sort items by statement type, then by category, then by 2 Accounts Receivable $ 13,400
liquidity. (b) Verify that Assets = Liabilities + Equity. If not, 3 Accum Depn (Building) $ 7,800
something wrong. 4 Accum Depn (Equipment) $ -
(B) Answer the following questions from the completed 5 Accum Depn (Fixtures) $ 3,600
statements: 6 Advertising Promotion $ 3,000
7 Beginning Inventory $ 18,000
a. Calculate Total 8 Buildings $ 77,000
Current Assets 9 Cash $ 6,120
b. Calculate Total Fixed 10 Contracts Payable $ 6,000
Assets 11 Depreciation Expense $ 2,000
c. Calculate Total Assets 12 Ending Inventory $ 18,200
13 Equipment $ 8,000
14 Fixtures $ 17,800
d. Calculate Total 15 Insurance Expense $ 18,000
Current Liabilities 16 Long Term Note $ 75,000
e. Calculate Cost of 17 Merchandise Inventory $ 19,200
Goods Sold 18 Miscellaneous Expense $ 4,000
f. Calculate Gross Profit 19 Notes Payable $ 4,000
20 Owners Equity $ 39,160
21 Payment on Building note $ 34,000
g. Calculate Total 22 Prepaid Expenses $ 2,040
Operating Expenses 23 Purchases during the year $ 22,000
h. Calculate Net Profit 24 Salaries Expense $ 68,000
25 Salaries Payable $ 5,000
26 Sales $ 178,000
i. Which Fixed Asset is 27 Suppliers Expenses $ 7,460
likely the “newest” 28 Utilities Expense $ 8,000
j. What adjustments to
incomes statement
needed to reflect
cash flow
Record Financial Statement Equations from your job aid:

Income Statement Cost of Goods Sold Balance Sheet
10

2. Pro-forma to evaluate financial impact of marketing strategies: At 10,000 units, Total Fixed
Costs are $200,000 and Total Variable Costs are $50,000. Costs and profit vary with output. The
item currently sells for $38. The company is considering how to double output to 20,000. Option 1 is
doing nothing. Option 2 is reducing price to $28. Option 3 is increasing advertising by $50,000.
a. Complete the following chart.
Assumptions Base Option 1 Option 2 Option 3

Output Units 10,000 20,000 20,000 20,000
Unit Price $38 $38 $28 $38
Variable Costs/Unit
Contribution per Unit
Proforma Income Statement
Total Revenue
-Total Variable Costs
Gross Profit
-Total Fixed Costs
Net Profit
Analysis
Gross Margin
Net Profit Margin
Break Even Units (Week 5)
Margin of Safety (Week 5)
b. Describe the relationship between Sales and Variable Costs? Sales and Fixed costs? Sales and
Gross Profit? Sales and Net Profit?
c. What is the difference between fixed and variable costs?
d. In order to double quantity of sales, is it better to reduce price or increase advertising? Explain
how you would decide the best marketing strategy?
e. Would your recommendation change if you considered breakeven units and Margin of Safety?
11
Do the Math Workbook for Marketing Metrics, by Karen Sinotte, Summer 2017
Worksheet 3: Financial Situational Analysis
Part A: Terminology
1. Explain these THREE types of analysis.
a. Vertical Analysis
b. Horizontal
Analysis
c. Ratio Analysis
2. Describe the ratios used to assess these FIVE aspects of financial performance.
a. Liquidity
b. Solvency
c. Efficiency
d. Overall
Effectiveness
e. Marketing
Effectiveness
3. Demonstrate your understanding of how to impact ratios (three examples)

a. Give 8 ways a
business might
improve gross
margin.
b. Give 8 ways a
business might
improve Net
Profit
c. Give 8 reasons a
company might
decide to spend
more than
benchmark on
advertising as %
of sales
.enchmark.
12
Part B: Practicing the Math
1. Fill in the missing values in Chart 1, Part ❶ (Income Statement with COGS).
2. Complete Chart 1, Part ❷, selected vertical, horizontal and ratio analysis. Then analyze the data to
assess company performance. Record your analysis in Chart 2. Is this company performing good or
bad? Be prepared to explain your answer.
3. Using Historical performance data, make determine a sales forecast and market strategy changes
that would be needed to achieve this sales target. Present this “plan” in a Pro-forma Income
Statement using Chart 1, Part ❸.
Chart 1: Income Statement with COGS
❶ Income 2006 2007 2008 2009 2010 ❸ 2011 F
Statement
Sales 37,000 53,000 71,000 98,000 125,500 1
Opening Inventory 6,000 8,500 2
Purchases 10,000 15,000 43,000 3
Goods Available 17,000 32,000 79,000 4
Closing Inventory 2,000 6,000 8,500 28,500 5
COGS 43,000 6
Gross Profit 55,000 7
Fixed Costs $40,000 $40,000 $40,000 $40,000 $40,000 8
Net profit 9
❷ Analysis 2006 2007 2008 2009 2010 ❸ 2011 F

Gross Margin % 10
Net Margin % 11
Average Inventory 12
Inventory Turnover 13
% Change in Sales 14
% Change in Gross 15
Profit
% Change in Net Profit 16
Chart 2: Strengths and Weaknesses Chart

❷ Analysis Strengths Weaknesses
From Income
Statement
From Vertical
Analysis
From Horizontal
Analysis
From Ratio
Analysis
Overall
Assessment
13
Worksheet 4: Forecasting and Budgeting
Part A: Terminology of Forecasting and Budgeting
1. From your reading assignments, explain market demand and the THREE levels of forecasting
a. Market Demand
b. Market Potential
c. Sales Potential
d. Sales Forecast
2. From your reading assignments, define chain ratio analysis for estimations and these
EIGHT Forecasting Methods
a. Chain Ratio
Analysis
b. Market Test
c. Trend Analysis
d. Market Factor
Analysis
e. Exponential
Smoothing
f. Jury of Executive
Opinion
g. Delphi Technique
h. Sales Force
Composite
i. Survey of Buyer
Intentions
3. From your reading assignments, define these SIX Budgeting Methods:

a. Objective and
Task Method
b. Compared with
Previous Year
c. Competitive Parity
Method
d. Percentage of
Sales Method
e. Unit of Sales
Method
f. Affordable Budget
Method
14
Part B: Practicing the Math (show your work)
A variety of methods are used, often in combination, to identify the factors affecting demand in various situations
(primary or secondary research, historical trend data, heuristics1, marketing experiences and common sense).
When forecasting be sure to state any assumptions and show all your calculations.
1 Statistics Canada provided demographic information about Canadian Population.

a. Give five unique observations or insights about Canadian Population. Graphically present this data.
b. How does national Canada data compare to your "home" town.
c. How might you use this information to estimate market potential for Holiday Caribbean in Toronto?
Population estimates by sex and age group as of July 1, 2011, Canada

(Source: Statistics Canada).
http://www.statcan.gc.ca/daily-quotidien/110928/t110928a4-eng.htm
Age group Total Male Female
Total 34,482,779 17,104,098 17,378,681

0 to 4 years 1,921,203 982,889 938,314
5 to 9 years 1,823,983 938,803 885,180
10 to 14 years 1,899,661 975,748 923,913
15 to 19 years 2,196,437 1,123,767 1,072,670
20 to 24 years 2,402,234 1,234,223 1,168,011
25 to 29 years 2,419,280 1,227,544 1,191,736
30 to 34 years 2,348,086 1,173,463 1,174,623
35 to 39 years 2,290,396 1,149,025 1,141,371
40 to 44 years 2,396,726 1,206,180 1,190,546
45 to 49 years 2,750,685 1,384,979 1,365,706
50 to 54 years 2,668,169 1,333,326 1,334,843
55 to 59 years 2,354,191 1,161,120 1,193,071
60 to 64 years 2,038,290 998,378 1,039,912
65 to 69 years 1,534,466 744,151 790,315
70 to 74 years 1,142,574 538,828 603,746
75 to 79 years 918,295 415,433 502,862
80 to 84 years 703,048 293,347 409,701
85 to 89 years 439,034 157,271 281,763
90 to 94 years 179,895 52,717 127,178
95 to 99 years 48,557 11,338 37,219
100 years + 7,569 1,568 6,001
1
Heuristics: Pertaining to the use of the general knowledge gained by experience to solve problems. Examples of
this method include using a rule of thumb, an educated guess, an intuitive judgment, or common sense
15
2 Forecast the demand in retail dollars for the new “Bongo Bumpers” toy in Canada for its first year of
launch. Use the market research data provided below and you will need to look up target population
at the Statistics Canada site.
Spin Master Toys would like to introduce a new battery powered adventure toy called “Bongo
Bumpers” targeted to boys aged 5-9 in Canada. It is a unique new toy that is expected to be a
Christmas season hit this year. The toy will sell for $25.
 A Spin Master survey estimated that 80% of boys who saw the toy in action would ask their
parents to purchase it for them.
 Past experience with their marketing campaigns estimates that 65 % of boys in Canada would
either see advertising or learn about the toy from friends within its first year of launch.
 Spin Master have learned that in general 50 % of parents or others in the family will purchase a
Spin Master toy that their child requests within a year, as Spin Master has an excellent reputation
for making toys that have lasting play value
Factors to consider % Assumption Calculations
Sources:
3. Estimate the size of dog food market in Winnipeg, Manitoba. Use Statistics Canada and market
research information that might be available on the interest to determine appropriate market factors
and % assumptions. Cite Sources.
Sources:
4. Estimate the number of red sports cars on the road in Toronto right now. For this one, use guestimates
rather than use internet sources.
Sources:
16
Worksheet 5: Breakevens and Pro-formas
Part A: Terminology of Breakevens and Pro-formas

1. For each of the following terms, define the term, be able to calculate it, and explain how marketers
use this information in evaluating the financial impact of marketing decisions.
1. Breakeven as percentage of sales
2. Breakeven with profit target
3. Contribution Margin
4. Contribution per unit
5. Fixed Costs
6. Gross Margin
7. Margin of Safety (BE as % of Sales

Forecast)
8. Pro-forma Income Statement
2. Give 5 business decisions that are informed using Breakeven analysis.

1.
2.
3.
4.
5.
17
Part B: Practicing the Math (show your work)
1. The WeRNuts Manufacturing company, ModelB product. Selling price $5.00 per unit, variable cost
$4.25 per unit, , Total fixed operating costs $750,000. In addition, they plan to increase advertising by
$80,000 and a profit goal of $70,000.
a. Calculate contribution per unit?
b. Calculate total fixed costs?
c. How many units must be sold to reach

breakeven?
d. How many units must be sold to reach
profit target?
2. David Company has Fixed costs $200,000, Selling price $250, Variable Cost per unit $200. Sales in
2003 are forecasted to be $1,250,000
c. How many units must be sold to

reach breakeven?
d. How many units do they plan to sell?
e. What is the expected Profit at

$1,250,000 in sales?
f. What is the Net Margin?
g. What is Contribution Margin?
h. How many units do they need to sell

if they wanted to make profit of 5%
of sales?
3. International Conventions overhead costs to produce the 3 day Marketing Conference is $90,000 and
their advertising costs are $50,000. They estimate that the variable costs for each attendee including
meals and materials are $350. They are charging a registration price per attendee of $1,500.
c. What is the break even number of

attendees?
d. If the Target Profit or return is $50,000,
what are the contribution target break
even numbers of attendees?
e. If the international Conventions raised
their prices per attendee to $2000 what
would their new break even attendance
be?
f. How might forecasted demand be
affected with change in price?
18
4. Currently a business sells 20,000 units at a selling price of $40. Total Fixed Costs are $500,000 which
includes $80,000 (or 10% of sales $) in marketing costs. Total Variable Costs are $100,000 at output of
20,000 units.
The business is looking to double their sales volumes to 40,000 units. A financial analysis will allow
you to recommend whether they should drop their price to $35.00 or increase their advertising spend
to 10% of sales in order to achieve their sales volume goals.
Create pro-forma income statements and breakeven analysis for the options described above and
answer these questions:
Answer the following questions. Show your work.

a. What is the current variable cost per unit based on
total variable costs of $100,000 at 20,000 units?
b. What is breakeven in units, based on current sales

of 20,000 units at selling price of $40 and total
fixed costs of $500,000 and total variable costs of
$100,000?
c. What will happen to breakeven if sales increase to

40,000 units, but price reduced to $35 and fixed
costs remain unchanged
d. What happen to break even if sales increase to

40,000, price remains unchanged at $40 and fixed
costs increase because total marketing costs
increased to 10% of sales?
e. As units sold increase, what will happen to unit

costs?
f. As units sold increase, what will happen to fixed

costs?
g. As units sold increase, what will happen to Total

Variable Costs?
h. What observations do you make about the

relationship between price, gross margin,
breakeven and net profit?
i. What observations to you make about relationship

between sales volumes, variable costs and
breakeven?
j. What observations to you make about relationship

between fixed costs and volumes?
k. Is it better to sell product at $35 (no change in

fixed costs) or $40 (and increase marketing to 10%
of $sales)? Explain your answer.
19
Worksheet 6: Tough Guy Sports Case
Tough Guy Sports is a full line sporting goods retailer. In 2016, market sales are forecasted to be
$3,429,000 up from $3,175,000 in 2015. Market sales information is provided so that you can calculate
market share and compare company sales growth with market growth. Also provided are the
company's Income Statement and Balance Sheet
Part I: Defining the Business Problem
A. Complete the three steps to complete financial situational assessment to define the business Problem. Show
your work.
1. Do the Math. Vertical, Horizontal and Ratio analysis of the 3 years of financial statements for the
company. See Financial Analysis Worksheet.
2. Look up the appropriate benchmark data for key ratios and other performance indicators for this
industry/market. Cite sources for industry benchmarks.
3. Analyze the data using a financial SWOT
Complete the Financial Situational Assessment Worksheet to determine if the company is doing
"good" or "bad". Draw conclusions from this data and consider the implications from this analysis
for next year's Business Planning.
Here is a check list for your financial situational assessment

 Look at both the income statement and balance sheet
 Look at costs and profit relative to sales and assets using vertical analysis
 Look at trends using horizontal analysis
 Consider liquidity, solvency, profitability and efficiency using ratios.
 Compare company performance against industry benchmarks
 Compare market growth against sales growth and market share for Tough Guy Sports.
B. Answer the following questions using information provided in the financial statements.
1. If Tough Guy sports was to decide to decrease
their prices by 10% next year, calculate the
new gross margin.
2. If Tough Guy Sports learned that the cost of
their products were going to increase by 10%
next year, calculate the new gross margin.
3 If Tough Guy Sports was to increase their

advertising spend again next year, what
happens to Gross Margin?
4 Calculate the new net profit if sales grow next
year by 10%.
20
Tough Guy Sports Financial Statements
Tough Guys Sporting goods
2013 2014 2015
Market Sales and
Market Sales for Sporting Goods 2,800 2,940 3,175
financial Statements Income Statement as of Dec 31
(Income Statement ($000) 2013 2014 2015
and Balance Sheet Sales $ 714.000 728.280 $ 764.694
Beginning Inventory $ 167.000 $ 174.000 $ 187.000
for Tough Guy Purchases $ 483.000 $ 492.000 $ 510.000
Sports. Cost of Goods Available for Sale $ 650.000 $ 666.000 $ 697.000
LESS ending Inventory $ 174.000 $ 187.000 $ 192.000

Cost of Goods Sold $ 476.000 $ 479.000 $ 505.000
On Income Statement, Gross Profit $ 238.000 $ 249.280 $ 259.694
Sales are reported as a Owners Salary $ 40.000 $ 41.200 $ 42.436
Net Number here, but
Employees Wages $ 71.300 $ 73.439 $ 75.642
includes 3% of sales for
Returns and Delivery Expense $ 5.700 $ 5.814 $ 6.200
Allowances in 2014, Legal Fees $ 4.200 $ 4.200 $ 4.200
which has been Advertising $ 20.700 $ 22.000 $ 25.000
increasing each year. Miscellaneous $ 46.100 $ 47.000 $ 48.000
Rent $ 11.424 $ 11.538 $ 11.654
Utilities Telephone $ 8.140 $ 8.140 $ 8.140
On Balance Sheet, Repairs and Maintenance $ 3.570 $ 4.500 $ 4.500
Fixed Assets are Insurance $ 3.570 $ 3.570 $ 3.570
reported net of Interest $ 8.568 $ 8.804 $ 8.611
Accumulated
Deprecation $ 7.140 $ 7.140 $ 7.140
Depreciation.
Total Operating Expenses $ 230.412 $ 237.345 $ 245.093
Net Profit before Tax $ 7.588 $ 11.935 $ 14.601
Balance Sheet as of Dec 31 ($000) 2013 2014 2015

Current Assets
Cash 10.000 18.000 $ 11.000
Net Accounts Receivable 30.000 28.000 $ 32.000
Inventory 174.000 187.000 $ 192.000
Other current Assets 30.000 32.000 $ 31.231
total Current Assets 244.000 265.000 $ 266.231
Fixed Assets, Net 116.000 108.000 $ 100.000
TOTAL ASSETS 360.000 373.000 $ 366.231
LIABILITIES
current Liabilities
Accounts Payable 87.000 109.540 $ 98.000
Notes Payable - Bank 39.000 32.000 $ 40.000
Taxes Payable 1.500 2.000 $ 2.000
Accrued Expenses 0.000 0.000 $ -
Total current liabilities 127.500 143.540 $ 140.000
Long Term Liabilities 218.000 211.460 $ 207.231

TOTAL LIABILITIES 345.500 355.000 $ 347.231
EQUITY
Common Stock 1.000 1.000 $ 1.000
Retained Earnings 13.500 17.000 $ 18.000
Total Equity 14.500 18.000 $ 19.000
TOTAL LIABILITIES and EQUITY 360.000 373.000 $ 366.231
Financial Analysis Worksheet - Doing the Math
21
Market Share (% 0f market sales) Market Growth (% Change)
Total Market 2013 2014 2015 2016 F 2014-13 2015-14 2015-13 2016-15
Total Market
Vertical Analysis (% 0f sales) Horizontal Analysis (% Change)
Income Statement 2013 2014 2015 2014-13 2015-14 2015-13
Sales 100.0% 100.0% 100.0%
Cost of goods Sold
Gross Profit
*Wages+Salaries
* Rent
* Advertising Expense
Total Operating Expenses
Net Operating Profit
Vertical Analysis (% of Total Assets) Horizontal Analysis (% Change)
Balance Sheet 2013 2014 2015 2014-13 2015-14 2015-13
Current Assets
Fixed Assets
Total Assets 100.0% 100.0% 100.0%
Current Liabilities
Long Term Liabilities
Total Liabilities
Equity
Ratio Analysis
Liquidity Ratios 2013 2014 2015 Benchmark**
Current Ratio
Quick Ratio
Solvency Ratios 2013 2014 2015 Benchmark
Debt Ratio
Debt to Equity Ratio
Profitability 2013 2014 2015 Benchmark
Return on Assets
Return on Equity
Gross Margin
Net Profit Margin
Efficiency 2013 2014 2015 Benchmark
Inventory Turnover
Total Asset Turnover
Advertising as % of Sales
* For Analysis, focus on the largest expense line items instead of doing horizontal and vertical analysis for all of the expense line items. For Retail, this
will typically be Salaries, Rent and Advertising.
** For Benchmark data, check out BB>Additional Resources posting that provides Internet Sources for benchmark data. Be sure to cite sources.
22
Financial Situational Assessment Worksheet, Analyzing the numbers
Strengths Weaknesses Good or Bad
Overall
Liquidity
Solvency
Efficiency
Effectiveness Overall
Marketing Effectiveness
23
Part II: Tough Guy Sports Case, Setting Goals and Considering Alternatives
When planning for next year, you need to set goals and consider alternative strategies to achieve these
goals. Use these three steps (1)Brainstorm, (2) Shortlist for SMART considerations (3) Compare financial
impacts of alternatives.
Step 1: Brainstorm: Based on the past performance of Tough Guy Sports, identify SEVEN possible
forecasted sales options for next year (using trend analysis based on "eyeball patterns seen in historical
data). For each option explain why you picked that number, provide $ Sales Estimate, forecasted market
share and % Change in Sales vs. 2015.
Possible Sales Forecasts (Based on Patterns seen in historical Sales Market % Chg
data) Estimate Share Vs 2015
1
Step 2: Get Real. Shortlist four forecast alternatives and identify marketing to achieve these four sales
forecasts. In particular, identify how the Marketing Mix might change.
Strategy Assumptions
Option Description
1
24
Step 3: Do the Math: Compare financial impact of alternative forecasts and strategies.
Step 3a: Estimate Profit and show your work in a Pro-forma Income Statement format.
Step 3b: Calculate key ratios that you will need to compare alternatives.
Step 3c: Assess risk by calculating Breakeven + Profit Target Sales and Margin of Safety
2015 Base 2016 F 2016 F 2016 F 2016 F

Line #
(from Part I) Option 1 Option 2 Option 3 Option 4
A. Pro-forma Income Statement
1
Sales 764.7
2
COGS 505.0
3
Gross Profit 259.7
Advertising 25.0
Other Fixed Cots 220.1 4
Total Fixed Cost 245.1
5
Net Profit 14.6
B Analysis and Key Ratios
6
Gross Margin 34%
7
Profit Margin 1.9%
8
Adv as % Sales 3.3%
9
Sales Growth 5.0%
10
COGS Growth 5.4%
11
Advertising Growth 13.6%
12
Net Profit Growth 22.3%
13
Market Share 24.1
Market Sales 3175 3,429 3,429 3,429 3,429 14
C Risk Analysis
Breakeven
15
Margin of Safety
BE w/2006 Profit Target
16
Margin of Safety
25
Part III: Tough Guy Sports Case Selling the Plan
Step 4: Sell your ideas: Which option would you recommend for Tough Guy Sports in 2015. Support your
recommendation with at least FIVE financial facts from the situational assessment and the comparison
completed above. Use your numbers to earn marks. Ratios are better than absolute numbers. Must
include both Risk and Reward.
Recommendation (Forecast and Strategy):
5 Reasons why
1
26
Worksheet 7: Pricing Decisions Heinz Case
Part A: Pricing Terminology
1. Based on your reading assignments, explain the following terms.
a. 5 C's of Pricing
b. Markups vs. Mark downs vs.

Gross Margin
c. Manufacturers Selling Price
vs. Retailers Selling Price
d. Drivers of Elasticity
e. How Market Structure affects

pricing strategies
f. Cannibalization
2. Based on your reading assignments and "heuristics", be able to apply pricing methods, objectives and strategies in case
situations.
Pricing Methods Pricing Objectives Pricing Strategies
1. Absorption Cost Pricing
2. Accessible Premium Pricing
Maximizing Profit 1. Cash Flow Objective 3. Bundle Pricing
4. Captive Product Pricing
2. Contribution Pricing 5. Capitation Pricing
6. Cost Plus Pricing
Maximizing Sales 3. Market Penetration Be able to 7. Competitive Based pricing
Volume 8. Differentiation
4. Market Share Objective match 9. Discount Pricing
Strategies to 10. Dynamic Pricing
5. Partial Cost Recovery 11. Economy Pricing
Establishing a Objectives 12. Every Day Low Pricing (EDLP)
competitive position 6. Profit Margin Maximization 13. Geographical Pricing
14. Going Rate (Price Leadership)
7. Profit Maximization 15. Good Better Best
16. High Low Pricing
8. Quality Leadership 17. Loss Leader
18. Marginal Cost Pricing
9. Quantity Maximization 19. Multiple Pricing
20. Odd Even Pricing
10. Revenue Maximization 21. On or Off Peak Pricing
22. Optional pricing
11. Skimming 23. Penetration pricing
24. Predatory Pricing
12. Status Quo 25. Pre-emptive Pricing
26. Premium pricing
13. Survival Pricing
27. Prestige Pricing
28. Price Discrimination
14. Target Profit Pricing
29. Price Stabilization
30. Pricing Variations
15. Target rate of return
31. Product Line Pricing
32. Promotional pricing
33. Psychological pricing
34. Reference Pricing
35. Relationship Pricing
36. Skimming
37. Time Based Pricing
38. Value Pricing
27
Part B Practicing the Math of Gross Profit, Mark-ups and Mark –Downs
1. A local clothing store buys a shipment of Oakley sunglasses for $79 per pair, and then resells
them for $115 per pair. Later in the season, the clothing store will put the glasses on sale for
$99.
a. What is mark up ($)?
b. What is Mark Up % (on cost)?
c. Calculate Gross Margin (Mark up on Selling Price)?
d. What is Markdown $?
e. What is Markdown %?
2. Sports Chek2 buys a pair of roller blades for $75 and prices them to realize a mark-up of $50.
The average operating cost to run a Sports Chek store is $1.1MM annually and roller blades
represents 2% of total store sales, and is allocated 2% of overhead costs as a result ($22,000).
a. What is selling price?
b. What is mark up ($)?
c. What is Mark Up % (on cost)?
d. Calculate Gross Margin (Mark up on Selling Price)?
e. How does this compare with Sporting Goods industry average
gross margin?
f. How many roller blades does Sports Check store need to sell to
make contribution of 3% net profit margin?
3. A convenience store buys 4 litre poly bags of milk for $4.99 and sells them for $5.29.
a. What is mark up ($)?
b. What is Mark Up % (on cost)?
c. Calculate Gross Margin (Mark up on Selling Price)?
d. How does mark-up for milk compare with the average mark up for
convenience store (hint: convert gross margin benchmark to mark-
up)
e. Why do convenience stores sell milk if it has such a low gross
margin compared to their other products? (TIP: Use breakeven
with profit target)
4. A cat food manufacturer sells through wholesalers to retailers. A 10kg bag retails for $16.95.
Retail mark-ups are 35% and wholesaler mark-ups are 10%. What is the manufacturers selling
price? HINT: Two step process, first calculate Retailers cost, then Wholesalers cost =
Manufacturers Selling Price
Retail Selling Price
Retail Cost = Wholesaler Selling Price
Wholesaler Cost =Manufacturer Selling Price
Manufacturer Cost
2
In May 2011, Canadian Tire bought Sports Chek stores in Canada owned by Forzari Group for $771 MM (500 stores, total
$1.4B in sales annually. [With that information that means about $2.8MM in sales per store. Sporting goods retailers
benchmarks suggest they earn about 38% GM and 1.5% net profit on average (Retailer Owners Institute, 2008), so operating
costs per store about $1.1MM.
28
PART C HEINZ KETCHUP PRICING CASE
The Business Situation:
Heinz Ketchup developed a new line of spicy ketchup targeted to adult tastes. It had a benefit not available in any
other Ketchup on the market- its taste was a gourmet herb and spice blend with the original smooth thick tomato
texture of original ketchup.
The marketing plan is developed and price is the only thing yet to be decided.
Research:
Consumer research showed that the product had superior taste to the original and competitors. There was 85%
intent to purchase among adult ketchup users who represent about 15 % of the ketchup market volume. Total
Canadian Market is estimated at 5 million units.
The costs have been estimated. Competitive Comparisons with consumer perception
Competitive Comparisons
Costs for producing Spicy Ketchup Retail Market Consumer perceptions
Brand
price 1L share Texture Taste Value
Raw materials $.48 Heinz
2.99 50 % High High High
Packaging $.50 original
Direct Labour $.27 PC Brand 2.79 25% Med High High
Production overhead $ 100,000 No name 2.49 15 % Med Low Low
Administrative expenses $ 120,000 Hunts 2.79 10 % Med High Med
Advertising and promotion $ 500,000 Total 2.851 100%
Retail and Wholesale margin 20% Spicy

tbd tbd High High High
Ketchup
1
Average Retail Price (weighted average)
Your task:
Compare financial impact of four pricing strategies and make a When selecting pricing options, consider the following
pricing recommendation supported by financial facts. 1. What factors might Heinz consider in setting the price for this new
product? (Hint: 5 C’s of marketing)
2. How helpful is the market research provided in this case to evaluate
1. Select 4 pricing options that Heinz might consider for this 3.
alternative pricing strategies?
How elastic is the product category? Explain your answer providing
new product. For each pricing option, provide sales at least 4 drivers of elasticity.
4. How might market share forecasts be impacted by various pricing
forecasts and marketing mix assumptions. strategies?
2. Create and compare pro-forma income statements, ratio 5. How might Marketing Budget Estimates be impacted by various
pricing strategies?
and breakeven analysis for first year. Use Pro-forma 6. How might other elements of marketing mix be affected by pricing
decisions?
template provided. 7. This case is for the product manufacturer, so you need to be able to
3. Which retail price do you recommend for this product? calculate manufacturer selling price from the retail selling price
provided in the research.
Justify your recommendation using at least five financial 8. How significant do you think that cannibalization of existing product
might be (i.e. impact on Sales and Gross Profit on Heinz Original
facts from your pro-forma and analysis. Hint: product sales)?
Recommendations will depend on the business objective
that you assume.
29
Part B Pro-forma template
Line
Assumptions Option 1 Option 2 Option 3 Option 4 Notes Item
Price Strategy 1
Retail Price 2
Manufacture Price 3
Manufacturers' VC
per Unit 4
Contribution per
unit 5
Market Share
assumption 6
Forecasted units 7
Pro-forma Income statement
Sales Revenue 8
COGS 9
Gross
Profit/Contribution 10
Advertising Costs 11
Other Fixed Costs 12
Total Fixed Costs 13
Net Profit 14
Analysis
Gross Margin 15
Net Profit Margin 16
Breakeven (in units) 17
BE Market Share 18
Margin of Safety
19
Advertising as % of
Sales Forecast 20
Cannibalization(high,
medium or low) 21
30
Worksheet 8: Financial Analysis to Inform Decisions
1. Flags are Us is a small company producing flags. They are considering entering into this new market
where the maximum market size is estimated at 6,000 flags. The following are the costs for the
company, fixed costs are $4,000 and the variable costs are 8 cents per flag. The company feels they
can sell a flag for $3.00 each.
Show your work in a Pro-forma income statement format
c. How many flags will need to be sold to

reach breakeven?
d. What is market share at breakeven?
e. How much profit would Flags are US make

at 50% market share?
f. Do you think that there will be a lot of
competitors or only a few in this market?
g. Should this opportunity be pursued? In
order to answer this question, create pro-
forma's for a minimum and maximum sales
potential as well and compare forecasts
against breakeven.
Option 1 Option 2 Option 3

Market Share Estimate BE____ 50% 10%
Unit Sales
Sales
Variable Costs
Fixed Costs
Net Profit
Profit Margin
Breakeven
Margin of Safety
31
2. Madeleine’s Beauty Salon has been doing very well since it started 5 years ago. 2015 income
statement is provided below. Madeleine is planning on expanding the business to a larger location.
With the expansion she feels that the potential new revenue will increase by 15% .However expenses
will also increase – rent will increase by $1,200 per month, one new employee at the cost of $2,000 per
month, additional costs for utilities of $50.00 per month and she would like to pay herself $500.00 a
month in salary for herself.
2015 % of Expansion % of % Change over

(Base) Sales Sales Base
Sales $155,000
COGS 38,000
Gross Profit 117,000
Fixed Expenses 85,000
Net Profit 32,000
Breakeven Sales with
Target Profit
b. Calculate total fixed costs after

expansion
c. What will net profit be for
expanded business?
d. How does percentage change in
net profit compare with change in
sales?
e. Calculate % increase in $ sales
needed to earn same pre-
expansion profit after the
additional fixed expenses of
expansion?
f. Is this a feasible move for her to
go through with her expansion
plans?
g. What other things would you
suggest regarding this situation?
32
3 A retailer purchased 100 new release computer games at a cost of $79.00 each. He was hoping to be able to sell
these during the pre-Christmas season at a 40% markup. He was targeting gamers that wanted to stay current
on their games and using a premium price as a result.
a. Sales were much lower than forecasted and he only sold 60 units at the full mark up of 40%.
Because the next version of the game was scheduled for release in February, the retailer
wanted to clear the balance of his inventory of this game, so he marked down the price by
40% and was able to clear all his merchandise by the end of the year. How much profit ($)
did the retailer make on this product in the end? What was the gross margin?
Price 1 Price 2 Total
Selling Price
Quantity
Costs
Contribution Per Unit
Mark up
Mark Down
Sales
COGS
Gross Profit
Gross Margin
Note: Average Selling Price is NOT (P1+P2)/2
b. Instead of pricing it at a 40% markup, how much profit would he have made if he has priced
it more accessibly at a more modest 20% mark-up? And because of the price elasticity of the
demand for the product, he would have been able to sell the full quantity of 95 units.
Price 1 Price 2 Total
Selling Price
Quantity
Costs
Contribution Per Unit
Mark up
Mark Down
Sales
COGS
Gross Profit
Gross Margin
Note: Average Selling Price is NOT (P1+P2)/2
c. Which pricing strategy would be better?
33
4. MARS, maker of M&M's candy, recently introduced M&M Premiums. The new candies include flavors such as
mint chocolate, mocha, chocolate almond and raspberry almond with white chocolate. They are wrapped in
indescent colors and sold in re-closable cartons. MARS also plans new offerings with its Snickers and Dove
brands. Although the new M&M Premiums will be able to charge a higher wholesale price ($0.48 per ounce
for the new product versus $0.30 per ounce for the original product), they also come with higher variable
costs ($0.35 per ounce for the new product versus $0.15 per ounce for the original product.
MARS is forecasting 300 million ounces of M&M Premium within the first year after introduction with an
increase in fixed costs of $5 MM during the first year of production of the new product.
Half of the forecasted M&M Premium sales will come from buyers who would normally purchase M&M
regular candies (cannibalized sales). The sales of regular M&M Candies are normally 1 billion ounces per year.
See Also: “Chocolate Confectionery in Canada” Euromonitor International, Oct 2014,
Answer the following questions:

What growth strategy is MARS undertaking?
Will the launch of new product be successful? Give financial facts to support your answer. Show work using
Pro-forma.
Before After
MARS ONLY MARS Premium Total % Change
Quantity
Price
Contribution/unit
Sales
Total Contribution
Fixed Costs
Net Contribution
$ -
34
5. A retailer has $10,000 to spend on advertising and is deciding which product line to promote, deciding
between Product A or Product B.
With Product A, the manufacturer offers matching coop advertising 3 of $10,000.
Product B is a private label and doesn’t have coop associated with it, but Product B is just now becoming very
popular and will benefit significantly from the advertising.
Which Product Line would you focus your marketing investment on? Give at least five financial facts to
support your answer. Use the pro-forma chart below to present your analysis.
Product A Product B
Before After Before After
Sales 160,000 220,000 36,000 120,000
COGS 80,000 110,000 14,400 48,000
Gross Profit/Contribution 80,000 110,000 21,600 72,000
Advertising - 10,000* - 10,000
Net Contribution to Profit 80,000 100,000 21,600 62,000
*Manufacturer for Line A offers $10,000 in coop advertising
$ change in Sales
% Change in Sales
Gross Margin %
Increase in Net Contribution$
% Change in Contribution
Return on Marketing Investment
Breakeven ($)
3
Agreement between a manufacturer and a member of distribution chain (distributor, wholesaler, or retailer)
where the manufacturer shares the partner's advertising and promotion costs, either as a percentage of sales or
as a fixed sum.
35
6. “City Hipsters” is a local clothing store specializing in cutting edge fashions for the 13-25 male and female
market. They have recently managed to get a great deal on a volume purchase of jeans. Each pair of jeans
cost them only $48.65, and they can sell them for $115.00 at full retail. They intend to use a consumer
promotion to sell all 500 pairs that they bought.
Here are the two options they're considering:

 Sweepstakes: They're considering giving away a weekend for four to Big White as the prize for a
'sweepstakes' promotion. Each purchaser of these jeans during the promotion would get one entry.
The cost of the prize would be about $1000 and the cost of printing the entry forms about $40.
 Premium: They're considering giving away a free belt with every pair of jeans sold. Their cost on the
belts they sell averages $10 each.
Use pro-forma income statement and breakeven analysis to compare the financial impacts of these two
options against a "base case" without any promotions. [Make your own chart this time!]
Answer these questions.

1. How much is their gross profit if they sell all 500 pairs of
jeans without using a sales promotion?
2. Which of the two sales promotion options would make them
the most gross profit if they sold all 500 pairs of jeans during
the promotion? Explain.
3. Which of the types of sales promotion would allow them to
make the most gross profit if they sold only 100 pairs of
jeans during the promotion? Explain.
4. Which sales promotion type would you recommend to
them? Explain your answer considering risk/reward trade-
offs.
5. Which one of these do you think would drive the highest
consumer interest and hence sales? Explain.
36
Week 10: Practice Case Worksheet
Read the assigned case (see Blackboard) and prepare individual case assessment for review with your
team.
1. Situational Assessment/Problem  Relevant

Benchmarks.
Cite sources.
 Problem not
symptom.
2. Objective  Must be
SMART
3. Alternatives  Establish
BASE and
number of
alternatives
per case
5. Recommendation  Give at least 5

financial
facts. Cite any
additional
sources.
37
4. Financial Assessment of Alternatives
Assumptions Option 1 Option 2 Option 3 Option 4 Notes Line
Quantity 1
Selling Price 2
VC/Unit 3
Contribution/per 4
unit
5
Pro-forma income statement

Sales 6
COGS 7
Gross Profit 8
Advertising 9
Costs
Other Fixed 10
costs
Total Fixed 11
Costs
Net Profit 12
Analysis
Gross Margin 13
Advertising as % 15
of sales
% Change in 16
Sales
% Change in 17
COGS
% Change in 18
Advertising
% Change in 19
Net Profit
Breakeven 20
Margin of Safety 21
22
23
38
Week 11: Case 1 Worksheet
team.

Benchmarks.
Cite sources.
 Problem not
symptom.
SMART
BASE and
number of
alternatives
per case

financial
facts. Cite any
additional
sources.
39
Quantity 1
Selling Price 2
VC/Unit 3
Contribution/per 4
unit
5

Sales 6
COGS 7
Gross Profit 8
Advertising 9
Costs
Other Fixed 10
costs
Total Fixed 11
Costs
Net Profit 12
Analysis
Gross Margin 13
Advertising as % 15
of sales
% Change in 16
Sales
% Change in 17
COGS
% Change in 18
Advertising
% Change in 19
Net Profit
Breakeven 20
Margin of Safety 21
22
23
40
team.

Benchmarks.
Cite sources.
 Problem not
symptom.
SMART
BASE and
number of
alternatives
per case

financial
facts. Cite any
additional
sources.
41
Quantity 1
Selling Price 2
VC/Unit 3
Contribution/per 4
unit
5

Sales 6
COGS 7
Gross Profit 8
Advertising 9
Costs
Other Fixed 10
costs
Total Fixed 11
Costs
Net Profit 12
Analysis
Gross Margin 13
Advertising as % 15
of sales
% Change in 16
Sales
% Change in 17
COGS
% Change in 18
Advertising
% Change in 19
Net Profit
Breakeven 20
Margin of Safety 21
22
23
42
team.

Benchmarks.
Cite sources.
 Problem not
symptom.
SMART
BASE and
number of
alternatives
per case

financial
facts. Cite any
additional
sources.
43
Quantity 1
Selling Price 2
VC/Unit 3
Contribution/per 4
unit
5

Sales 6
COGS 7
Gross Profit 8
Advertising 9
Costs
Other Fixed 10
costs
Total Fixed 11
Costs
Net Profit 12
Analysis
Gross Margin 13
Advertising as % 15
of sales
% Change in 16
Sales
% Change in 17
COGS
% Change in 18
Advertising
% Change in 19
Net Profit
Breakeven 20
Margin of Safety 21
22
23
44
Week 14: Exam Review
Check out your grade so far on BB:
20−𝑀𝑇 𝐺𝑟𝑎𝑑𝑒
What do you need to earn on Final to pass the course: 30
= ______% on your final exam
Getting Ready Checklist?

Topic Topics Work Prepare Not
sheet dl sure
18. Marketing Frameworks and how to use them to make marketing mix Market 1
decisions share
19. Calculating market share and market growth to be used in forecasting 1

and financial analysis
20. Financial Statements: The math and components of Balance Sheet Financial 2
and Income statement Statement
s
21. Financial Analysis of Statements: The math and drivers of financial Financial 3, 6
ratios including Liquidity, Solvency, Efficiency/Profitability, Ratios
Effectiveness overall, marketing effectiveness in particular
22. By understanding the drivers of ratios, assess the relative values of 3, 6
different industry benchmarks.
23. Assess the strengths and weaknesses of company’s financial 3, 6
performance, using trend in financial ratios and benchmarks.
24. Calculate change in Gross Margin when price or product changes, 3, 4, 5, 6
especially when you don't have quantity, selling price or VC per unit.
25. Describe the pros and cons of different forecasting methods. Forecastin 4
g and
Budgeting
26. Describe the pros and cons of different budgeting methods. 4
27. Complete an estimation question using market factors using the chain 4
ratio analysis format.
28. Estimate the profit impact of a marketing strategy given a sales target Pro- 5,6,7, 8
and a change in marketing mix. Report in Pro-forma Income formas
and
statement format. breakeven
29. Estimate the profit impact of a pricing strategy. Report in Pro-forma 7
Income statement format.
30. Assess the risk of a marketing strategy using breakeven and Margin of 5, 6, 7, 8
Safety.
31. Names the five Cs of pricing and use these to inform pricing decisions. Pricing 7
32. Assess the likely elasticity of demand for a given product category. 7
33. Describe various pricing strategies and the objective that might be 7
achieved by using these pricing strategies
34. Describe and implement the 5 step case process Cases Case
Process workshe
ets
45
And one last practice assignment. Instructions to be announced.
Financial Assessment of Alternatives

Quantity 1
Selling Price 2
VC/Unit 3
Contribution/per 4
unit
5

Sales 6
COGS 7
Gross Profit 8
Advertising 9
Costs
Other Fixed 10
costs
Total Fixed 11
Costs
Net Profit 12
Analysis
Gross Margin 13
Advertising as % 15
of sales
% Change in 16
Sales
% Change in 17
COGS
% Change in 18
Advertising
% Change in 19
Net Profit
Breakeven 20
Margin of Safety 21
22
23
46
Now this is not the end. It is not even the beginning of
the end. But it is, perhaps, the end of the beginning.
Winston Churchill
47

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"Do the Math"

Do the Math Workbook for Marketing by Karen Sinotte Summer 2017

Do the Math Workbook for Marketing by Karen Sinotte Summer 2017

10. Complete an estimation question using market factors using 4

15. Assess the likely elasticity of demand for a given product 7

16. Describe various pricing strategies and the objective that 7

Do the Math Workbook for Marketing by Karen Sinotte Summer 2017

Do the Math Workbook for Marketing by Karen Sinotte Summer 2017

Marketing Frameworks Marketing Measures of Success

Do the Math Workbook for Marketing by Karen Sinotte Summer 2017

4. Pros and Cons of growing market share, Give 4 of each.

b. Answer the following questions from the chart above

Do the Math Workbook for Marketing by Karen Sinotte Summer 2017

b. How much revenue did one market share

b. Calculate next year's market share if

d. How might you compare your performance

b. How might you forecast what will happen to

Do the Math Workbook for Marketing by Karen Sinotte Summer 2017

Do the Math Workbook for Marketing by Karen Sinotte Summer 2017

Do the Math Workbook for Marketing by Karen Sinotte Summer 2017

Record Financial Statement Equations from your job aid:

Do the Math Workbook for Marketing by Karen Sinotte Summer 2017

Assumptions Base Option 1 Option 2 Option 3

c. What is the difference between fixed and variable costs?

3. Demonstrate your understanding of how to impact ratios (three examples)

Closing Inventory 2,000 6,000 8,500 28,500 5

Gross Profit 55,000 7

Fixed Costs $40,000 $40,000 $40,000 $40,000 $40,000 8

❷ Analysis 2006 2007 2008 2009 2010 ❸ 2011 F

Chart 2: Strengths and Weaknesses Chart

3. From your reading assignments, define these SIX Budgeting Methods:

1 Statistics Canada provided demographic information about Canadian Population.

Population estimates by sex and age group as of July 1, 2011, Canada

Total 34,482,779 17,104,098 17,378,681

Part A: Terminology of Breakevens and Pro-formas

1. Breakeven as percentage of sales

2. Breakeven with profit target

4. Contribution per unit

7. Margin of Safety (BE as % of Sales

2. Give 5 business decisions that are informed using Breakeven analysis.

b. Calculate total fixed costs?

c. How many units must be sold to reach

b. Calculate total fixed costs?

c. How many units must be sold to

e. What is the expected Profit at

h. How many units do they need to sell

b. Calculate total fixed costs?

c. What is the break even number of

Answer the following questions. Show your work.

b. What is breakeven in units, based on current sales

c. What will happen to breakeven if sales increase to

d. What happen to break even if sales increase to

e. As units sold increase, what will happen to unit

f. As units sold increase, what will happen to fixed

g. As units sold increase, what will happen to Total

h. What observations do you make about the

i. What observations to you make about relationship

j. What observations to you make about relationship

k. Is it better to sell product at $35 (no change in

Part I: Defining the Business Problem

Here is a check list for your financial situational assessment

Record # _ Team #