Advertising Expenses

 

This is the amount spent on advertising, including media and promotional expenses as well as any marketing activities outsourced by the company like hiring a creative advertising agency.

The advertising expense only shows the amount spent on advertising. Thus, larger companies generally have larger advertising expenses, but this does not provide any insight into a company's actual performance. The advertising expense- to- sales ratio, calculated by dividing the advertising expense by sales, is indicative of the company's advertising efficiency. If the advertising expense-to-sales ratio is unusually high for example, either the company's advertising has become less cost-effective than it should be or the company is experiencing a decline in demand for its products.

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