Oak Grove Vineyards Recently Set Up an E-Commerce Site to Sell

question 138

Multiple Choice

Oak Grove Vineyards recently set up an e-commerce site to sell monthly wine club subscriptions to its award-winning collection of California wines. The company knows that it will earn $70 in profit in just the first month that each customer subscribes. The marketing manager is using Google Ads to promote the new service, and she has calculated that the conversion cost for her current Google Ad is about $45 per subscriber. What does this data tell her? ​

• A) The ad campaign is profitable as is.
• B) She should discontinue the ad campaign because it's not profitable.
• C) If she could find a way to decrease the conversion cost, she could make the campaign profitable.
• D) She needs to figure out how to increase the profit per subscriber.

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Definitions:

Descending Order of Liquidity

Ranking assets on a balance sheet from the most liquid (easily converted into cash) to the least liquid.

Debt and Equity Financing

The methods by which a company raises capital to finance its operations or expand its business, involving borrowing (debt) or selling shares (equity).

Investing Activities

Transactions and events that involve the purchase and sale of long-term assets and other investments not generally considered cash equivalents.

Capital to Purchase Fixed Assets

Financial resources allocated for the purchase of long-term physical assets that a company uses in its operations.