1 / 9

Popular Exam Question on Average Performance Ratios

Popular Exam Question on Average Performance Ratios. Ted Mitchell. You have a firm that is selling in three markets In each market you are recording the profit from the sales force effort (ROME) as a measure of sales force productivity. Home market: Profit $150k, ROME = $30k/salesman

naomi-clarke
Download Presentation

Popular Exam Question on Average Performance Ratios

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Popular Exam Question on Average Performance Ratios Ted Mitchell

  2. You have a firm that is selling in three markets • In each market you are recording the profit from the sales force effort (ROME) as a measure of sales force productivity. • Home market: Profit $150k, ROME = $30k/salesman • Domestic market:Profit: $100k, ROME= $20k/salesman • Foreign market:Profit $90K, ROME= $5k/salesman • What is the average return per salesman (ROME) for your firm?

  3. The popular wrong answer is • Wrong average ROME =($30k/salesman + $20k/salesman +$5k/salesman)/3 • $55k/salesman/3 = $18.3k/salesmen

  4. You have a firm that is selling in three markets • In each market you are recording the profit from the sales force effort (ROME) as a measure of sales force productivity. • First Expand the DataProfit = ROME x (No. of Salesmen) • Home market: Profit $150k, ROME = $30k/salesman • Domestic market:Profit: $100k, ROME= $20k/salesman • Foreign market:Profit $90K, ROME= $5k/salesman

  5. First Expand the Datainto all the components Profit = ROME x (No. of Salesmen) • Home market: Profit $150k, ROME = $30k/salesman • $150k = $30k x 5 salesmen • Domestic market:Profit: $100k, ROME= $20k/salesman$100k = $20k x 5 salesmen • Foreign market:Profit $90K, ROME= $15k/salesman • $90k = $5k x 18 salesmen

  6. Profit ??????/salesperson $30k/salesperson $150k $20k/salesperson $100k $5k/salesperson $90k 18 5 Salesmen

  7. Second find total effort and total profit • Home market: $150k = 30k x 5 salesmen • Domestic market:$100k = 20k x 5 salesmen • Foreign market:$90k = $15k x 18 salesmen • Total market: $340k = ROME x 28 salesmen • Third Calculate the Average ROME • Average ROME = $340k/28 • Average ROME = $12.14k/salesman

  8. $340k Profit $12.14k/salesperson $30k/salesperson $150k $20k/salesperson $100k $5k/salesperson $90k 18 28 5 Salesmen

  9. Compare the wrong • ROME = 18.3/salesperson • to the correct answer • ROME 12.14/salesperson

More Related