Interviewer view · keep this screen to yourself

Gross to net: where the money goes on one case of product

You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.

Case timer

00:00

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

An illustrative snack brand sells a case of product at a list price of USD 100. It gives USD 10 of off-invoice discount, funds USD 8 of promotions, and pays USD 4 in listing and display fees. Making the case costs USD 40. Advertising to consumers costs USD 12 per case, and overheads and distribution cost USD 10. What are net sales, gross profit, and operating profit, and what margins do they give?

2. Answers to clarifying questions

This case has no scripted clarifying answers. Answer from the prompt, and say "assume what you think is reasonable" if the prompt does not cover it.

3. A model structure

Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.

Gross sales minus trade spend = net sales; then subtract COGS, A&P, overheads
- Trade spend = discounts + promotions + fees
- Margins are shown on net sales, the reported revenue

4. The working, step by step

Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.

Step 1: Trade spend
What a strong candidate does: Discounts, promotions, and fees.
Trade spend (USD per case): 10 + 8 + 4 = 22
Step 2: Net sales
What a strong candidate does: List price minus trade spend.
Net sales (USD per case): 100 - 22 = 78
Step 3: Gross profit
What a strong candidate does: Net sales minus the cost of making the product.
Gross profit (USD per case): 78 - 40 = 38
Step 4: Gross margin
What a strong candidate does: Gross profit as a share of net sales.
Gross margin (percent of net sales): 38 ÷ 78 × 100 = 48.72
Step 5: Operating profit
What a strong candidate does: Subtract A&P and overheads.
Operating profit (USD per case): 38 - 12 - 10 = 16
Step 6: Operating margin
What a strong candidate does: Operating profit as a share of net sales.
Operating margin (percent of net sales): 16 ÷ 78 × 100 = 20.51

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

The brand should review its trade spend before cutting factory costs, because trade spend of USD 22 per case is bigger than the USD 16 of operating profit. First, out of USD 100 of list price, net sales are only USD 78, and operating margin is about 20.5 percent. Second, trade spend is almost twice the USD 12 of advertising, so each dollar recovered goes straight to profit. The risk is that cutting promotions or listing fees loses shelf space. As a next step, test the return on each promotion and fee with the largest retailers.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.