Biz-Café Weekly
Performance Statement
With Pastry
Ted Mitchell
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
Evolution of the Weekly statement
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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
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
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
Total Revenue (Coffee + Pastry)
$8,680
Cost of Goods Sold (Coffee + Pastry)
$640
Gross Profit (Coffee + Pastry)
$8,040
Marketing Effort, Servers, Advert, Radio, E
$2,400
Marketing Profit, Z
$5,640
Return on Marketing Effort, Z/E
ROME = 235%
(P-V)/P =93.5%
(P-V)/P = 75%
GROS = 92.6%
MROS = 70.5%
Quantity Coffee Sold
2,000
Price coffee medium
$4.00
Note How the Markup is different
Revenue Coffee
$8,000
from the Gross Return on Sales
Variable cost per cup
$0.26
Gross Profit, Coffee
$7,480
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
Total Revenue
$8,680
Cost of Goods Sold
$640
Gross Profit
$8,040
Marketing Effort, Servers, Advert, Radio, E
$2,400
Marketing profit, Z
$5,640
Return on Marketing Effort, Z/E
ROME = 235%
(P-V)/P =93.5%
(P-V)/P = 75%
GROS = 92.6%
MROS = 70.5%
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%
Gross Profit, Pastry
$1,800
(P-V)/P = 75%
Total Weekly Revenue
$8,680
Cost of Goods Sold
$640
Gross Profit
$8,040
Marketing Effort, Servers, Advert, Radio, E
$2,400
Marketing profit, Z
$5,640
Return on Marketing Effort, Z/E
ROME = 235%
Marketing Profit Returned
on
600
Sales, MROS
Price for Pastry
$2.00
Revenue Pastry
$1,200
Marketing Profit Returned
on
Variable Cost of the Pastry
$0.50 ROME
Marketing “Investment”
Quantity of Pastry Sold
GROS = 92.6%
MROS = 70.5%
Basic Profit Equation Has Changed
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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 = ($3.74 + $1.50 (0.3))Q – F
Z = ($3.74 + .45)Q – F
Z = $4.19Q – F
Balance Sheet
• Traditional Assets
• Cash, equipment, accounts receivable
• into a statement of market and competitive
assets
• Awareness, customer satisfaction, market
share
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
50,000
Awareness = % of total
90%
Customer Satisfaction
65
Average Customer Sat
70
Relative
Customer Sat
Awareness
as
65/70 = 92.86% of the Total Population of
a Percentage
Market Share, S Potential
??? Customers in the Market
Average market share, Sa 1/N = ???
Relative market share, Sr
S/Sa = ???
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
50,000
Awareness = % of total
90%
Customer Satisfaction
65
Average Customer Sat
70
Relative Customer Sat
65/70 = 92.86%
Relative market share, Sr
S/Sa = ???
Customer
satisfaction
as
a
stand
alone
number
Market Share, S
???
is not
Average market share, Sa 1/N
= ??? very useful
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
50,000
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
to Average
Customer
Relative market share, Sr
S/Sa = ???
Satisfaction is Useful
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
50,000
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 = ???
Market Share needs to be relative to something to be useful
Relative market share, Sr
S/Sa = ???
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
50,000
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 = ???
Compare Balance Sheets
End of Week 8
End of Week 9
∆ = W9-W8
Cash
35,000
43,000
8,000
Assets
20,000
20,000
0
Depreciation
(5,000)
(5,200)
(200)
Total Assets
50,000
Loans
25,000
Retained Earnings
25,000
57,800
7,800
Relative to Something is the key to
25,000
0
usefulness
32,800
7,800
Total Liabilities
50,000
Awareness
90%
93%
+3%
Relative Satisfaction
93%
94%
+1%
Relative Market Share
???
???
???
Compare Balance Sheets
End of Week 8
End of Week 9
∆ = W9-W8
Cash
35,000
43,000
8,000
Assets
20,000
20,000
0
Depreciation
(5,000)
(5,200)
(200)
Total Assets
50,000
57,800
7,800
Loans
25,000
25,000
0
Retained Earnings
25,000
32,800
7,800
Total Liabilities
50,000
57,800
7,840
Awareness
90%
93%
+3%
Relative Satisfaction
93%
94%
+1%
Relative Market Share
???
???
???
• Any Questions on the Type of Performance
Statement and Balance Sheet that Marketers
want?