1. Biz-Café Weekly Performance Statement With Pastry
Ted Mitchell

2. Two Classic Accounting Statements
1) The Income Statement
Written as a statement about the flows over the reporting period (week, month, etc.)
2) The Balance Sheet
Written for the specific point in time, a snap shot of one day’s situation

3. Evolution of the Weekly statement
Monthly Income Statement
To a
Weekly Income Statement
Weekly marketing performance statement with Advertising and Radio to generate marketing profit, MROS, ROME
Weekly Marketing Performance Statement including servers as a sales force.
Weekly Marketing Performance Statement with Pastry Sales changing the GROS from the MP

4. Quantity Coffee Sold
2,000
Price coffee medium
$4.00
Revenue Coffee
$8,000
Variable cost per cup
$0.26
Gross Profit, Coffee
$7,480
(P-V)/P =93.5%
Quantity of Pastry Sold
600
Price for Pastry
$2.00
Revenue Pastry
$1,200
Variable Cost of the Pastry
$0.50
Gross Profit, Pastry
$1,800
(P-V)/P = 75%
Total Revenue (Coffee + Pastry)
$8,680
Cost of Goods Sold (Coffee + Pastry)
$640
Gross Profit (Coffee + Pastry)
$8,040
GROS = 92.6%
Marketing Effort, Servers, Advert, Radio, E
$2,400
Marketing Profit, Z
$5,640
MROS = 70.5%
Return on Marketing Effort, Z/E
ROME = 235%

5. Note How the Markup is different from the Gross Return on Sales
Quantity Coffee Sold
2,000
Price coffee medium
$4.00
Revenue Coffee
$8,000
Variable cost per cup
$0.26
Gross Profit, Coffee
$7,480
(P-V)/P =93.5%
Quantity of Pastry Sold
600
Price for Pastry
$2.00
Revenue Pastry
$1,200
Variable Cost of the Pastry
$0.50
Gross Profit, Pastry
$1,800
(P-V)/P = 75%
Total Revenue
$8,680
Cost of Goods Sold
$640
Gross Profit
$8,040
GROS = 92.6%
Marketing Effort, Servers, Advert, Radio, E
$2,400
Marketing profit, Z
$5,640
MROS = 70.5%
Return on Marketing Effort, Z/E
ROME = 235%
Note How the Markup is different from the Gross Return on Sales

6. Marketing Profit Returned on Sales, MROS
Quantity Coffee Sold
2,000
Price coffee medium
$4.00
Revenue Coffee
$8,000
Variable cost per cup
$0.26
Gross Profit, Coffee
$7,480
(P-V)/P =93.5%
Quantity of Pastry Sold
600
Price for Pastry
$2.00
Revenue Pastry
$1,200
Variable Cost of the Pastry
$0.50
Gross Profit, Pastry
$1,800
(P-V)/P = 75%
Total Weekly Revenue
$8,680
Cost of Goods Sold
$640
Gross Profit
$8,040
GROS = 92.6%
Marketing Effort, Servers, Advert, Radio, E
$2,400
Marketing profit, Z
$5,640
MROS = 70.5%
Return on Marketing Effort, Z/E
ROME = 235%
Marketing Profit Returned on Sales, MROS
Marketing Profit Returned on Marketing “Investment” ROME

7. Basic Profit Equation Has Changed
Profit = PQ – VQ – F
Z = PQ – VQ – Ad – Radio – Server Expense
Z = (P – V)Q + (Pp –Vp)Qp – F
What is the relationship between Q and Qp?
Qp = 30%Q
Z = (P –V)Q + (Pp –Vp)(30%)Q – F
Z = (coffee unit profit)Q + (pastry unit profit)(30%)Q – F
Z = ($ $1.50 (0.3))Q – F
Z = ($ )Q – F
Z = $4.19Q – F

8. Balance Sheet Traditional Assets Cash, equipment, accounts receivable
into a statement of market and competitive assets
Awareness, customer satisfaction, market share

9. Weekly Balance Sheet for Week 8 at Sunday Midnight
Cash
35,000
Loans
25,000
Assets
20,000
Depreciation
(5,000)
Retained Earnings
30,000
Total Assets
50,000
Total Liabilities
Awareness = % of total
90%
Customer Satisfaction 65
Average Customer Sat 70
Relative Customer Sat
65/70 = 92.86%
Market Share, S
???
Average market share, Sa
1/N = ???
Relative market share, Sr
S/Sa = ???
Awareness as a Percentage of the Total Population of Potential Customers in the Market

10. Weekly Balance Sheet for Week 8 at Sunday Midnight
Cash
35,000
Loans
25,000
Assets
20,000
Depreciation
(5,000)
Retained Earnings
30,000
Total Assets
50,000
Total Liabilities
Awareness = % of total
90%
Customer Satisfaction 65
Average Customer Sat 70
Relative Customer Sat
65/70 = 92.86%
Market Share, S
???
Average market share, Sa
1/N = ???
Relative market share, Sr
S/Sa = ???
Customer satisfaction as a stand alone number is not very useful

11. Weekly Balance Sheet for Week 8 at Sunday Midnight
Cash
35,000
Loans
25,000
Assets
20,000
Depreciation
(5,000)
Retained Earnings
30,000
Total Assets
50,000
Total Liabilities
Awareness = % of total
90%
Customer Satisfaction 65
Average Customer Sat 70
Relative Customer Sat
65/70 = 92.86%
Market Share, S
???
Average market share, Sa
1/N = ???
Relative market share, Sr
S/Sa = ???
Relative to Average Customer Satisfaction is Useful

12. Weekly Balance Sheet for Week 8 at Sunday Midnight
Cash
35,000
Loans
25,000
Assets
20,000
Depreciation
(5,000)
Retained Earnings
30,000
Total Assets
50,000
Total Liabilities
Awareness = % of total
90%
Customer Satisfaction 65
Average Customer Sat 70
Relative Customer Sat
65/70 = 92.86%
Market Share, S
???
Average market share, Sa
1/N = ???
Relative market share, Sr
S/Sa = ???
Market Share needs to be relative to something to be useful

13. Weekly Balance Sheet for Week 8 at Sunday Midnight
Cash
35,000
Loans
25,000
Assets
20,000
Depreciation
(5,000)
Retained Earnings
30,000
Total Assets
50,000
Total Liabilities
Awareness = % of total
90%
Customer Satisfaction 65
Average Customer Sat 70
Relative Customer Sat
65/70 = 92.86%
Market Share, S
???
Average market share, Sa
1/N = ???
Relative Market Share, Sr
S/Sa = ???

14. Compare Balance Sheets
Relative to Something is the key to usefulness
End of Week 8
End of Week 9
∆ = W9-W8
Cash
35,000
43,000
8,000
Assets
20,000
Depreciation
(5,000)
(5,200)
(200)
Total Assets
50,000
57,800
7,800
Loans
25,000
Retained Earnings
32,800
Total Liabilities
Awareness
90%
93%
+3%
Relative Satisfaction
94%
+1%
Relative Market Share
???

15. Compare Balance Sheets
End of Week 8
End of Week 9
∆ = W9-W8
Cash
35,000
43,000
8,000
Assets
20,000
Depreciation
(5,000)
(5,200)
(200)
Total Assets
50,000
57,800
7,800
Loans
25,000
Retained Earnings
32,800
Total Liabilities
7,840
Awareness
90%
93%
+3%
Relative Satisfaction
94%
+1%
Relative Market Share
???

16. Any Questions on the Type of Performance Statement and Balance Sheet that Marketers want?