Financial Management & Budgeting Flashcards

A SaaS company spends $200,000 on marketing and acquires 400 new customers. What is the cost per acquisition?

Answer: $500

CPA = Total Marketing Spend / New Customers = $200,000 / 400 = $500.

Which of the following best describes 'marketing payback period'?

Answer: Months required for cumulative revenue to recover the initial marketing investment

Marketing payback period measures how long it takes for customer revenue to recoup the cost of acquiring them.

A brand allocates budget using competitive parity. The primary risk of this approach is:

Answer: Ignoring the company's own objectives and efficiency

Competitive parity mimics competitors' spend levels without accounting for the company's unique goals or ROI potential.

In a multi-touch attribution model, budget reallocation decisions should be based on:

Answer: Each channel's marginal contribution to conversions

Multi-touch attribution measures each channel's incremental contribution, guiding investment toward highest-impact touchpoints.

A marketing analytics manager uses scenario planning in budgeting. What is its primary purpose?

Answer: To model multiple budget outcomes under different assumptions

Scenario planning creates best-case, base-case, and worst-case budget models to prepare for uncertainty.

If a campaign's incremental revenue is $90,000 and incremental cost is $30,000, what is the incremental ROI?

Answer: 200%

Incremental ROI = (Incremental Revenue − Incremental Cost) / Incremental Cost = ($90,000 − $30,000) / $30,000 = 200%.

Which budget allocation strategy is most appropriate when launching a brand-new product with no historical data?

Answer: Objective-and-task budgeting

Objective-and-task budgeting defines goals first then estimates the spend required, making it ideal when historical data is absent.