Which of the Following Is a Possible Outcome of a Sales

question 173

Multiple Choice

Which of the following is a possible outcome of a sales promotion?

• A) Sales increase during the period of the promotion and then remain at a higher level than they were at the start of the promotion.
• B) Sales increase during the period of the promotion, decrease when the promotion ends, and then return at the original level where they were prior to the promotion.
• C) Sales increase during the period of the promotion, but then immediately return to the original level that they were prior to the promotion.
• D) All of these are possible outcomes of a sales promotion.

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Definitions:

Operating Leverage

A measure of how sensitive a company's operating income is to changes in its revenue, indicating the proportion of fixed versus variable costs.

Financial Risk

The possibility of losing money on an investment or business venture due to various financial factors.

ROE

Return on Equity; a financial ratio indicating the profitability of a company by comparing net income to shareholders' equity.

EBIT

Earnings Before Interest and Taxes, a measure of a company's profitability excluding interest and income tax expenses.