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A Short Marketing Course
Management Ratios

Key Ratios

  • Profit as % of Capital Employed
  • Profit as % of Sales
  • Sales/Capital Employed
  • Sales : Fixed Assets
  • Sales : Stocks
  • Sales per Employee
  • Profit per Employee

How ratios can help - Diagnosis, Control, Forward Planning

Achieving the optimum balance

  • Maximization of profitable sales
  • Minimization of marketing costs
  • Minimization of assets used

How to improve the key ratios

  • Increase sales without a corresponding increase in costs or assets
  • If expansion is not possible, reduce costs or assets without a corresponding reduction in sales
  • Improve overall contribution margin by increasing ratio of sales of high : low margin lines
  • Review of product range - today's/yesterday's/tomorrow's bread winners

Subsidiary ratios - May be useful to break ratios down further e.g. office costs, etc

As a rule

It is better to have half a dozen ratios which are easily obtained, understood, considered and acted upon than many which are a burden to prepare and overwhelm.




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