Part I
This question will introduce you to some key marketing concepts.
Please read the attached article, Marketing and Social Media. This article talks about the emerging role of social media and social media marketing (SMM) as a tool marketers can use to promote their products and services online in a unique and differentiated manner.
Please answer the following questions once you've read this blog.
1. Identify one of the key roles of social media from a marketing management perspective? Identify two (2) ways in which social media is different from more traditional marketing tactics?
2. Consider the following statement - Social media is rapidly going to become more important than traditional media in promoting the products and services of companies. Do you agree with this statement? Support your answer by using relevant business concepts.
3. Measuring the promotional effectiveness of a social media program or strategy isn't typically based strictly on ROI. What are the key determinants for a successful social media promotional campaign? Do you feel these measures are relevant from a marketing perspective? Explain.
Maximum length - 400 words or 2 pages.
Part II
The objective of this task is to understand some of the key concepts in financial management. This requires an understanding of basic financial and managerial accounting.
The concepts you need to know include:
- Understand and analyze financial statements: Income Statements, Balance Sheets and Cash Flow Statements.
- Understand the cost structure of the business in terms of revenues, variable costs and fixed costs (and ultimately profitability) in order to conduct break-even analysis.
- Conduct the appropriate financial analysis to demonstrate that a business is sustainable.
Scenario
Usain Bolt, an experienced financial analyst at Speedster Athletics Company, has been charged with assessing the firm's financial performance in 2011 and specifically its financial position at year-end 2011. To complete this assignment, he gathered the firm's 2011 financial statements, shown below.
Assignment
Using the financial information below, answer the following questions:
1. Calculate the following three ratios for 2011 - using the financial data provided. Please show your work on an excel spreadsheet
- Return on equity (ROE)
- Earnings per share (EPS)
o Assume a share price of $10/share at year end, Dec. 31.
- Debt to owners' equity ratio (debt equity ratio - D/E)
2. For the three ratios listed above, explain what it could mean to the company if the calculated number went up? What if it went down? What story does each tell about the Speedster Athletics Company? Be company specific in your responses (don't make generalizations). Limit your response to 4 sentences per ratio. (10 marks)
3. Write a 2 page business memo to the CEO of Speedster Athletics Company, outlining the current financial position of the organization (both strengths and weaknesses). Maximum length 400 words. (40 marks)
- To justify your response, you must include 4 supporting arguments (i.e. examples) from the financial information provided below (2 for the strengths and 2 for the weaknesses).
- Your last paragraph should be a recommendation to the organization for the direction you suggest they take in the next several years.
Income Statement
Speedster Athletics Company for the year ended 2011
|
Sales revenue
|
$5,075,000
|
|
Less: Cost of goods sold
|
$3,704,000
|
|
Gross margin
|
$1,371,000
|
|
Less: Operating expenses
|
|
| Selling expense |
$655,000
|
| General and admin expenses |
$422,000
|
|
Amortization expense
|
$152,000
|
|
Total operating expense
|
1,229,000
|
|
Operating earnings (EBIT)
|
$ 142,000
|
|
Less: Interest expense
|
$92,000
|
|
Earnings before taxes
|
$ 50,000
|
|
Less: Taxes (rate = 40%)
|
$20,000
|
|
Net income after taxes
|
$ 30,000
|
Balance Sheet
|
December 31
|
|
|
2010
|
2011
|
|
Current assets
|
|
|
| Cash |
$ 24,100
|
$ 25,000
|
| Accounts receivable |
$763,900
|
$805,556
|
| Inventories |
$763,445
|
$700,625
|
| Total current assets |
$1,551,445
|
$1,531,181
|
|
Gross fixed assets (at cost)
|
$1,691,707
|
$2,093,819
|
|
Less: Accumulated amortization
|
$348,000
|
$500,000
|
|
Net fixed assets
|
$1,343,707
|
$1,593,819
|
|
Total assets
|
$2,895,152
|
$3,125,000
|
Speedster Athletics Company Assets
Liabilities and shareholders' equity
|
Current liabilities
|
|
|
| Accounts payable |
$400,500
|
$230,000
|
| Line of credit |
$370,000
|
$311,000
|
| Accruals |
$100,902
|
$75,000
|
| Total current liabilities |
$871,402
|
$ 616,000
|
|
Long-term debt
|
$700,000
|
$1,165,250
|
| Total liabilities |
$1,571,402
|
$1,781,250
|
|
Shareholders' equity
|
|
|
| Preferred shares |
$50,000
|
$50,000
|
| Common shares |
$293,750
|
$293,750
|
| Retained earnings |
$980,000
|
$1,000,000
|
|
Total shareholders' equity
|
$1,323,750
|
$1,343,750
|
|
Total liabilities and shareholders'
equity
|
$2,895,152
|
$3,125,000
|
Historical Ratios - Speedster Athletics Company
|
Ratio
|
Actual 2009
|
Actual 2010
|
Industry Average 2011
|
|
Current ratio
|
1.7
|
1.8
|
1.5
|
|
Quick ratio
|
1.0
|
.9
|
1.2
|
|
Average age of inventory
|
70.2 days
|
73 days
|
35.8 days
|
|
Average collection period
|
50 days
|
55 days
|
46 days
|
|
Total asset turnover (times)
|
1.5
|
1.5
|
2.0
|
|
Debt ratio
|
45.8%
|
54.3%
|
24.5%
|
|
Times interest earned ratio
|
2.2
|
1.9
|
2.5
|
|
Gross margin
|
27.5%
|
28.0%
|
26.0%
|
|
Profit margin
|
1.1%
|
1.0%
|
1.2%
|
|
Return on total assets (ROA)
|
1.7%
|
1.5%
|
2.4%
|
|
Return on equity (ROE)
|
3.1%
|
3.3%
|
3.2%
|
Attachment:- Marketing Social Media Article.pdf