Certified Financial Management Specialist Practice Exam

Sales growth in modeling is typically defined as:

1. A decrease in gross sales compared to previous quarter

2. An increase in gross sales compared to the previous quarter

3. A steady performance from the last quarter

4. A comparison of yearly net profits

The correct answer is: An increase in gross sales compared to the previous quarter

Sales growth in modeling is defined as the increase in gross sales compared to the previous quarter. This reflects a positive trend in the company's performance, indicating that the business is generating more revenue over time. By measuring sales growth, financial analysts and management can assess the effectiveness of sales strategies, marketing efforts, and overall business health. This measure is essential for understanding how well a company is expanding its revenue base, ensuring that stakeholders can make informed decisions regarding investments, resource allocation, and strategic planning. The other options illustrate different scenarios: a decrease in sales points towards declining performance, a steady performance indicates stagnation rather than growth, and a comparison of yearly net profits focuses on profitability rather than sales volume. Hence, they do not fit the definition of sales growth in the context of business modeling.