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Metric 2 worksheet

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Department
Marketing
Course
MKT 300
Professor
Shavin Malhotra
Semester
Spring

Description
Worksheet: Metric 2 Percentage Change 1) Ed’s is a small deli, which has had great success in its second year of operation. Revenues  in Year 2 are $570,000, compared with $380,000 in Year 1. What is Ed’s year­over­year  sales growth rate? 2) A pair of jeans that normally sells for $75 is marked down 30% and then reduced at the  cash register another 10%? Is this a total reduction of 40%? If not, what is the percent  reduction? 3) A small retain chain posts impressive percentage growth figures, moving from $58  million to $107 million in sales from one year to the next. Despite this dynamic growth,  however, analysts cast doubt on the firm’s business model, warning that its existing  stores’ growth measure suggests that its concept is failing. Based on the chart below, and  assuming that stores were opened on the first day of Years 1 and 2: What is the retail  chain’s year­over­year sales growth rate?  What is the year­over­year sales growth or  decrease for each store, as appropriate? What is the same store (existing and not  expansion) year­over­year growth?  Store Opened Revenue Year 1 (millions) Revenue Year 2 (millions) A Year 1 $10 $9 B Year 1 $19 $20 C Year 1 $20 $15 D Year 1 $9 $11 E Year 2 n/a $15 F Year 2 n/a $12 G Year 2 n/a $7 H Year 2 n/a $18 $58 $107 4) Do you agree with the analysts’ position regarding the retail chain in question 3, why or  why not? If you were the owner of the retail chain would you continue to open stores? If  not what would you do? Answers: Question 1 Answer: Year­over­Year Sales Growth = (Year 2 – Year 1) / Year 1 * 100%    = ($570,000 ­ $380,000) / $380,000 * 100%      = 50% Question 2 Answer: Let Price 1 be the initial price of $75, let Price 2 be the price after the 30% mark down, and Price  3 be the price after additional 10% reduction at the cash register. Initial Reduction = ­30%
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