Profit Sharing Should Not Be a Significant Part of a Sales

question 15

Multiple Choice

Profit sharing should not be a significant part of a sales compensation plan,because profit:

• A)Is not sufficiently controllable by the reps.
• B)Cannot be measured objectively.
• C)Fluctuates too much.
• D)Provides no incentive for the reps.
• E)Greatly reduces management's ability to control the sales force activities.

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Definitions:

Original Investment

The initial amount of money put into a project, asset, or venture.

Sales And Leaseback Arrangement

A financial transaction where one sells an asset and leases it back for the long-term; thus, one continues to use the asset but no longer owns it.

Operating Lease

A lease agreement allowing the use of an asset without ownership, typically with shorter terms than a finance lease.

Asset-Based Loan

An asset-based loan is a type of lending, often secured by a company's assets, where the loan amount is based on a percentage of the value of those assets.