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Biz-Café Weekly Performance Statement With Pastry Ted Mitchell.

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Presentation on theme: "Biz-Café Weekly Performance Statement With Pastry Ted Mitchell."— Presentation transcript:

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

4 Quantity Coffee Sold2,000 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 Sold600 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)$8,040GROS = 92.6% Marketing Effort, Servers, Advert, Radio, E$2,400 Marketing Profit, Z$5,640MROS = 70.5% Return on Marketing Effort, Z/EROME = 235%

5 Quantity Coffee Sold2,000 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 Sold600 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$8,040GROS = 92.6% Marketing Effort, Servers, Advert, Radio, E$2,400 Marketing profit, Z$5,640MROS = 70.5% Return on Marketing Effort, Z/EROME = 235% Note How the Markup is different from the Gross Return on Sales

6 Quantity Coffee Sold2,000 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 Sold600 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$8,040GROS = 92.6% Marketing Effort, Servers, Advert, Radio, E$2,400 Marketing profit, Z$5,640MROS = 70.5% Return on Marketing Effort, Z/EROME = 235% Marketing Profit Returned on Sales, MROS Marketing Profit Returned on Marketing “Investment” ROME 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 Cash35,000Loans25,000 Assets20,000 Depreciation(5,000)Retained Earnings30,000 Total Assets50,000Total Liabilities50,000 Awareness = % of total90% Customer Satisfaction65 Average Customer Sat70 Relative Customer Sat65/70 = 92.86% Market Share, S??? Average market share, Sa1/N = ??? Relative market share, SrS/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 Cash35,000Loans25,000 Assets20,000 Depreciation(5,000)Retained Earnings30,000 Total Assets50,000Total Liabilities50,000 Awareness = % of total90% Customer Satisfaction65 Average Customer Sat70 Relative Customer Sat65/70 = 92.86% Market Share, S??? Average market share, Sa1/N = ??? Relative market share, SrS/Sa = ??? Customer satisfaction as a stand alone number is not very useful

11 Weekly Balance Sheet for Week 8 at Sunday Midnight Cash35,000Loans25,000 Assets20,000 Depreciation(5,000)Retained Earnings30,000 Total Assets50,000Total Liabilities50,000 Awareness = % of total90% Customer Satisfaction65 Average Customer Sat70 Relative Customer Sat65/70 = 92.86% Market Share, S??? Average market share, Sa1/N = ??? Relative market share, SrS/Sa = ??? Relative to Average Customer Satisfaction is Useful

12 Weekly Balance Sheet for Week 8 at Sunday Midnight Cash35,000Loans25,000 Assets20,000 Depreciation(5,000)Retained Earnings30,000 Total Assets50,000Total Liabilities50,000 Awareness = % of total90% Customer Satisfaction65 Average Customer Sat70 Relative Customer Sat65/70 = 92.86% Market Share, S??? Average market share, Sa1/N = ??? Relative market share, SrS/Sa = ??? Market Share needs to be relative to something to be useful

13 Weekly Balance Sheet for Week 8 at Sunday Midnight Cash35,000Loans25,000 Assets20,000 Depreciation(5,000)Retained Earnings30,000 Total Assets50,000Total Liabilities50,000 Awareness = % of total90% Customer Satisfaction65 Average Customer Sat70 Relative Customer Sat65/70 = 92.86% Market Share, S??? Average market share, Sa1/N = ??? Relative Market Share, SrS/Sa = ???

14 Compare Balance Sheets End of Week 8End of Week 9∆ = W9-W8 Cash35,00043,0008,000 Assets20,000 0 Depreciation(5,000)(5,200)(200) Total Assets50,00057,8007,800 Loans25,000 0 Retained Earnings25,00032,8007,800 Total Liabilities50,000 Awareness90%93%+3% Relative Satisfaction93%94%+1% Relative Market Share??? Relative to Something is the key to usefulness

15 Compare Balance Sheets End of Week 8End of Week 9∆ = W9-W8 Cash35,00043,0008,000 Assets20,000 0 Depreciation(5,000)(5,200)(200) Total Assets50,00057,8007,800 Loans25,000 0 Retained Earnings25,00032,8007,800 Total Liabilities50,00057,8007,840 Awareness90%93%+3% Relative Satisfaction93%94%+1% Relative Market Share???

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


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