Financial Management & Budgeting Flashcards

A marketing team's campaign generated $180,000 in revenue against a $45,000 spend. What is the ROAS?

Answer: 4.0

ROAS = Revenue / Ad Spend = $180,000 / $45,000 = 4.0.

Which budgeting method allocates funds based on a fixed percentage of projected sales revenue?

Answer: Percentage-of-sales budgeting

Percentage-of-sales budgeting sets the marketing budget as a fixed share of forecasted or past sales revenue.

A company has a Customer Lifetime Value (CLV) of $500 and an acceptable CAC:CLV ratio of 1:3. What is the maximum acceptable CAC?

Answer: $167

A 1:3 CAC:CLV ratio means CAC ≤ CLV / 3 = $500 / 3 ≈ $167.

In marketing budget variance analysis, a favorable variance occurs when:

Answer: Actual spend is below budget with equal or better results

A favorable variance means spending less than budgeted while still achieving the planned outcomes.

Which metric best measures the efficiency of marketing spend across multiple channels when comparing them?

Answer: Cost per acquisition (CPA)

CPA standardizes the cost to acquire one customer, enabling apples-to-apples channel comparison.

A zero-based budgeting (ZBB) approach differs from incremental budgeting primarily because ZBB:

Answer: Requires every expense to be justified from scratch each cycle

ZBB starts from zero and requires full justification of every budget line, eliminating legacy spend assumptions.

When calculating net marketing contribution (NMC), which costs are subtracted from gross profit?

Answer: All marketing program expenses

NMC = Gross Profit − All Marketing Program Expenses, isolating marketing's financial contribution.