FINANCIAL ASPECTS OF MARKETING SCHMIDT R., WRIGHT H Księgarnia

FINANCIAL ASPECTS OF MARKETING Ruth A. Schmidt and Helen Wright

This is a core text for students studying the financial aspects of marketing for the first time. It moves systematically through the subjects covered in the majority of courses, reinforcing learning through a number of pedagogical features, including:

• numerous exercises and examples

• learning objectives at the beginning of each chapter and summaries at the end

• case studies to pull together the areas covered

• a glossary of terms

• answers at the back of the book

The use of spreadsheets is integrated into the text.

Ruth A. Schmidt is Principal Lecturer in the Department of Retailing and Marketing at the Manchester Metropolitan University. Before going into teaching she was a self-employed market trader and she obtained all her academic qualifications, including a master's degree, as a part-time student. She teaches finance for non-financial managers on a range of courses, many designed for adult part-time students sponsored by their companies. In the course of her work on the BA (Hons) Retail Marketing by Open Learning, which is run by the department for J Sainsbury pic, she has written a comprehensive set of distance learning materials in the area of finance.

Helen Wright is Senior Lecturer in the Department of Retailing and Marketing at the Manchester Metropolitan University. She is a graduate of Cambridge University and obtained her PhD at the University of Manchester. She has had many years' experience of teaching qualitative subjects, both directly and by correspondence, to students pursuing undergraduate, postgraduate and professional qualifications in management and business subjects. Her writing activities have included a statistics textbook, contributions to the journal Teaching Statistics and to A Practical Guide to Data Handling for the Mathematical Association.

Contents

List of Figures

List of Tables

Acknowledgements

1 Introduction to the Finance and Marketing Interface

1.1 Background and target readership

1.2 Additional equipment required

1.3 Structure

1.4 Progression through the text

PART I INTRODUCTION TO FINANCIAL STATEMENTS

2 The Balance Sheet

2.1 Learning objectives

2.2 Introduction

2.3 Defining the balance sheet

2.4 Assets

2.5 Liabilities

2.6 Capital

2.7 Impact of business transactions on the balance sheet

2.8 Summary

3 The Cash How Statement and the Profit and Loss Account

3.1 Learning objectives

3.2 The cash flow statement

3.3 Business objectives

3.4 The profit and loss account

3.5 Summary

4 The Matching Concept: Stock Valuation and Depreciation

4.1 Learning objectives

4.2 The matching concept

4.3 Stock valuation

4.4 Profit calculation: the impact of stock valuation

4.5 Depreciation

4.6 Impact of depreciation method on net profit

4.7 Summary

5 Reconciliation of financial Statements

5.1 Learning objectives

5.2 Recording the movements of working capital

5.3 Summary

6 Introduction to Spreadsheets: Calculations and Charts

6.1 Learning objectives

6.2 What is a spreadsheet?

6.3 Input, calculations and formulae

6.4 Enhancing the appearance of a worksheet

6.5 Printing and saving a worksheet

6.6 Absolute cell references < .".

6.7 Spreadsheet templates

6.8 Drawing charts

6.9 Printing out charts 6.10 Summary

Case Study 1 McTucky's Ltd: Final Accounts

PART II RATIO ANALYSIS

7 Introduction to Ratio Analysis

7.1 Learning objectives

7.2 Interpretation of financial statements

7.3 An overview of ratio analysis

7.4 Summary

8 Analysis of Asset Utilisation, Profitability and Performance

8.1 Learning objectives

8.2 Business performance objectives

8.3 Resource utilisation

8.4 Profitability

8.5 Assessing and building performance

8.6 Summary

9 Returns to Investors

9.1 Learning objectives

9.2 Investment ratios

9.3 Capital structure

9.4 Summary

10 Analysis of Profit Pathways

10.1 Learning objectives

10.2 Constructing the profit tree

10.3 Constructing a spreadsheet template for the profit tree

10.4 Summary

Case Study 2 Caria Firenze Trading Ltd: A Benetton Franchise

PART III FORECASTING

11 Time Series Analysis

11.1 Learning objectives

11.2 Introduction to forecasting

11.3 Components of a time series

11.4 Estimation of trend

11.5 Forecasting the trend

11.6 Estimating the seasonal variations

11.7 Sales forecast

11.8 Modifications for other time intervals

11.9 Summary

12 Using a Spreadsheet in Time Series Analysis

12.1 Learning objectives

12.2 Introduction

12.3 Historigram

12.4 Calculation of the trend

12.5 Graphing the trend

12.6 Calculating the seasonal variations

12.7 Summary

13 Short-term Forecasting

13.1 Learning objectives

13.2 Nature of short-term forecasting

13.3 Exponential smoothing

13.4 Monitoring the forecasting system

13.5 Summary

14 Forecasting Using Relationships Between Variables

14.1 Learning objectives

14.2 Introduction

14.3 Scatter diagram

14.4 The correlation coefficient

14.5 Interpretation of the correlation coefficient

14.6 Summary

15 Regression

15.1 Learning objectives

15.2 Introduction

15.3 Equation of a straight line graph

15.4 Least squares regression line

15.5 Forecasting using the regression line

16 Linear Regression on the Spreadsheet

16.1 Learning objectives

16.2 Drawing a scatter diagram

16.3 Linear regression commands

16.4 Interpretation of linear regression output

16.5 Making predictions using the regression equation

16.6 Summary

17 Multiple Regression

17.1 Learning objectives

17.2 Introduction

17.3 Setting up a multiple regression model

17.4 Warning

17.5 Summary

Case Study 3 Collett Brothers pic: Forecasting to Improve Efficiency

PART IV COSTING AND BUDGETING

18 Introduction to Costing Systems

18.1 Learning objectives

18.2 Introduction

18.3 The need for a costing system

18.4 Relating overhead costs to activities

18.5 Costing a product's journey through the value chain

18.6 Summary

19 Budgeting

19.1 Learning objectives

19.2 Business objectives and the budgetary control process

19.3 Implications of budgeting for line management

19.4 Master budgets

19.5 Summary

20 Budgetary Control

20.1 Learning objectives

20.2 Variance analysis and budgetary control

20.3 Drawing up a flexible budget on a spreadsheet

20.4 Summary

Case Study 4 The 'Sycamore' Public House: Introducing a Budgetary Control System

PART V DECISION-MAKING

21 Introduction to Decision-making

21.1 Learning objectives

21.2 Introduction

21.3 The factors of production

21.4 Classification of costs

21.5 Determining the optimal resource mix

21.6 Summary

22 Introduction to Break-even Analysis

22.1 Learning objectives

22.2 Introduction

22.3 Calculating the break-even point

22.4 Break-even chart

22.5 Using break-even analysis to compare alternative strategies

22.6 Limitations of break-even analysis

22.7 Summary

23 Sensitivity Analysis for Break-even Analysis

23.1 Learning objectives

23.2 Sensitivity analysis

23.3 Setting up a template

23.4 Using the template

23.5 Summary

24 Short-term Decision-making

24.1 Learning objectives

24.2 Long-term and short-term decisions

24.3 Short-term decision-making: incremental analysis

24.4 Summary

25 Pricing Decisions

25.1 Learning objectives

25.2 Introduction

25.3 Strategic aspects of pricing decisions

25.4 The impact of costs on pricing decisions

25.5 Implications for pricing strategy

25.6 Summary

26 Making Long-term Investment Decisions

26.1 Learning objectives

26.2 Compound interest

26.3 Present value

26.4 Use of present value tables

26.5 Discounted cash flow calculations

26.6 Comparison of investment proposals

26.7 Internal rate of return

26.8 Summary

27 Decision-making Under Risk

27.1 Learning objectives

27.2 Games of chance

27.3 Expected monetary value

27.4 Maximising expected monetary value

27.5 Payoff matrix

27.6 Expected value of perfect information

28 Long-term Decision-making on the Spreadsheet and Sensitivity Analysis

28.1 Learning objectives

28.2 Financial functions on the spreadsheet

28.3 Sensitivity analysis

28.4 Summary

Case Study 5 The Bloomsbury Supermarkets pic Coffee Shop Experience:

Making Long-term Capital Investment Decisions

Answers to Exercises