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Marketing and finance
Key concepts covered in this chapter:
- Net profit and return on sales (ROS)
- Return on investment (ROI)
- Economic profit (a.k.a. EVA®)
- Project metrics: payback, NPV, IRR
- Marketing ROI (MROI or ROMI)
- Total shareholder returns
- Price to earnings (PE) ratio
- Market to book ratio
Introduction
As marketers progress in their careers, it becomes increasingly necessary to coordinate their plans with other functional areas. Sales forecasts, budgeting, and estimating returns from proposed marketing initiatives are often the focus of discussions between marketing and finance. For marketers with little exposure to basic finance metrics, a good starting point is to gain a deeper understanding of rate of return. Return is generally ...
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