Case 1: Purchase Point Media Corporation (PPMC)
Senior Capstone: Business : Purchase Point Media Corporation (PPMC)
Lesson 2 Overview
This case is based on actual financial projections developed and
provided by a publicly traded firm, Purchase Point Media Corporation
(PPMC). Carefully examine the PPMC projections, which are
presented in a sequence and format suitable for break-even
calculation and analysis. After you calculate the break-even point, use
additional, publicly available information to come to a decision with
respect to market potential. The increase in the price per share of
PPMC stock suggests that, over time, the market may have reacted to
their results and analyses, using a comparable methodology.
2.1 Recognize the PPMC projections and the data associated with it in the presented case Case 1: Purchase Point Media Corporation (PPMC)
Purchase Point Media Corporation (Pink Sheets: PPMC) is what some
refer to as a thinly traded “corporate shell.” The firm held patents in
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the United States, Canada, United Kingdom, and Germany for a
shopping-cart display device, but was a nonreporting and
On March 18, 2002, PPMC reported its intention to sell these patents
and related trademarks. The initial estimates suggested a stock price
of nearly $2.50 per share, before related per-share deductions for
sale-related broker’s commissions and legal fees. At the time of the
news release, the firm’s stock was trading at $0.04 per share. In less
than 60 days the stock was trading at more than $0.60 per share
(Cataldo 2003, 55–60), for a 1,400 percent increase in price per
share. (Note that investors and speculators alike would view this as a
very risky investment, and the price per share for PPMC stock would
be expected to fall short of or sell at a significant discount to the
“anticipated” selling price for the firm’s intangible assets. See Arbel
and Strebel 1982 and 1983; Arbel, Carvell and Strebel 1983; and
Arbel 1985 for guidance on thinly traded or “neglected” firms.)
While this initial news release attracted speculators, causing the stock
price to rise, after months without any additional news releases, the
stock price drifted down again. On August 20, 2003, PPMC again
announced its intention to sell the firm’s intangible assets (Business
In the second announcement, PPMC management referred interested
investors to their corporate Web site. Among the data provided, PPMC
included a financial projection and other items they felt might be of
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interest to potential purchasers of the firm’s intangible assets (see
Exhibit 1, Purchase Point Media Corp. statement, which follows).
To begin this case, review and comment on the “form” of the public
disclosure circulated by PPMC. Then use the “substance” of this
information to develop per-unit, sales-based contribution margins and
break-even points for the first year of operations. Last, gather other
publicly available information to determine the market feasibility of
achieving its break-even point.
PURCHASE POINT MEDIA CORP
Projected Statement of Net Income
For the first twelve months of operations
Safe harbor statement under the private securities litigation act of
1995. This project statement of net income contains forward-looking
statements, all such forward-looking statements are by necessity only
estimates of future results and actual results achieved by this
company may differ materially from these statements due to a number
of factors. Both the Corporate house and Purchase Point Media Corp.
assumes no obligation to update these forward-looking statements to
reflect actual results. Changes in assumptions or changes in other
factors affecting such statements. You should independently
investigate and fully understand all risk before making investment
Suite 100 -141 5th Ave., New York, NY. 10010
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Purchase Point Media Corp., 141 5th Ave., Suite 1100, New York, NY
Attention: Albert Folsom
We have prepared the attached Projected Statement of Net Income
for a twelve Month period for Purchase Point Media Corp., (The
Company”) from information supplied to us by management and from
various other periodicals and reports. These figures do not include
start-up and development costs.
We have made basic assumptions in compiling the information given
to us in that revenue will commence to be generated once the
Company’s patented display panels have been installed in 1,200
stores, and a total of 1,200 stores subsequent to the first month will be
added to the Company’s list of clients each month thereafter for a total
of 14,400 stores in year one.
The Projected Statement of Net Income has been prepared in
accordance with generally accepted accounting principles except that
no consideration has been given for Federal and State taxes which,
had the taxes been calculated at the statutory rates in effect, would
have had an impact on net income.
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If the Company decides to remain with only 14,400 stores during its
second year of operations and does not expand at all, projected gross
revenue will increase to approximately $150,000,000.
If you have any questions regarding the above please feel free to
contact us at any time.
Yours very truly; Corporate House
Per: /S/ _________________
Richard T. Hethey, Director, Attachment
PURCHASE POINT MEDIA CORP.
NOTES TO THE PROJECTED STATEMENT OF NET INCOME
1. Advertising Revenue It is expected a minimum of 14,400 stores
will be using the Company’s unique display panel by the end of
the first year. The Company expects to affix its display panel on
100% of the grocery carts or the equivalent of 200 carts per
Month Number of Stores at End of the Month Gross Advertising Revenue Monthly
Gross Advertising Revenue by Quarter
1st 1200 1,620,000
2nd 2400 3,240,000
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3rd 3600 4,860.000
4th 4800 6,480,000
5th 6000 8,100,000
6th 7200 9,720.000
7th 8400 11,340,000
8th 9600 12,960,000
9th 10800 14,580,000
10th 12000 16,200,000
11th 13200 17,820,000
12th 14400 19.440.000
Total $ 126,360,000
i. As mentioned above, 14,400 individual supermarkets have
been selected for the first year of operations. The estimate
assumes 1,200 new stores each month subsequent to the
initial opening of 1,200 stores in the first month. The
Company required a minimum of 300 stores in the first
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month to qualify for contracting with advertising agencies
since they require a $5,000,000,000 annual sales figure from
the companies they will be advertising with.
ii. Statistics indicate there are on the average 60,000
customers per month shopping at any given supermarket in
the United States. The cost to the advertiser is $2.25 per
1,000 customers, which equates to $135.00 per month for
display on the advertising panels. The advertiser is under a
quarterly contractual agreement. With 10 advertisers on a
display panel each supermarket will provide a gross revenue
of $1,350 per month. With 1,200 stores coming on stream in
the first month, the total gross revenue is projected at
2. Amortization of Display Panels The display panel is
manufactured using an injection mold process. The end product
is made of heavy durable plastic. In addition to the display panel
itself, fastenings are an integral part of the assembly of the panel
on the grocery cart. Total manufacturing and installation cost is
$6.22 per display unit.
It is assumed the display panel will be affixed to 100% of the
carts in the supermarket. Statistics show the average
supermarket uses 200 grocery carts. Therefore, 200 carts will
have the Company’s panel installed. It is assumed the panels will
have a life expectancy of 5 years or longer. The total cost in the
first year of operations is $17,913,600. For conservative
purposes, amortization of the display panels is taken over a two-
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year period rather than a five-year period. Assuming a two-year
amortization based on the straight-line method, the annual
expense will be $8,956,800. Therefore, in the first year, each
quarter will bear the cost of $2,239,200
3. Printing of Inserts The advertising agreement with an advertiser
will be for a three-month period after which the advertiser is free
to renew or discontinue the service. If one advertiser decides not
to renew the agreement or is willing to renew but wishes to use
another product, the entire insert must be reprinted. This
assumes that every quarter a new set of inserts must be printed.
The cost to print each of the inserts is $0.11, which covers freight
and spoilage. The figure of $0.11 is conservative based on
quotes received by management which indicates 300,000 inserts
can be printed on #50 Smooth White Offset paper in four colors
one side process for $8,454 or $0.03 per insert. The following
analysis determines the expense each month and by quarter for
Month New Grocery Carts With Advertising Renewal Printing
Total Per Month
1st 240,000 – 240,000
2nd 480,000 – 480,000
3rd 720,000 – 720,000 1,440,000
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4th 960,000 240,000 1,200,000
5th 1,200,000 240,000 1,440,000
6th 1,440,000 240,000 1,680,000 4,320,000
7th 1,680,000 240,000 1,920,000
8th 1,920,000 240,000 2,160,000
9th 2,160,000 240,000 2,400,000 6,480,000
10th 2,400,000 240,000 2,640,000
11th 2,640,000 240,000 2,880,000
12th 2,880,000 240,000 3,120,000 8,640,000
Total 20,880,000 $ 2,296,000
4. Replacement Due to Vandalism Regardless of the security
precautions taken by the individual supermarkets, vandalism, and
theft will occur. This will represent a cost to the Company since it
cannot be charged to either the supermarkets or advertisers.
Management is currently seeking insurance, which will lessen
this expense, but for conservative purposes, no consideration has
been given to recovery of these costs by way of insurance
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It is estimated vandalism will affect 5% of the display panels. This
is relatively high but until facts are known a conservative
approach has been adopted. Vandalism will occur in two different
fashions: first, by placing graffiti on the display unit and, secondly,
by smashing the unit in some way. Both will result in the
replacement of the unit. No consideration has been given for
grocery carts that have been stolen from the supermarkets since
until the cart is located no replacement of the display unit will
occur and might not be required.
The panels are fully recyclable and therefore will have the effect
of reducing the overall cost of manufacturing the pane. No
recovery from this source has been considered in this projection
of net income during the twelve-month period.
Since there are 2,880,000 panels installed at the end of the first
year, this would mean 144,000 would require a replacement
panel. Assuming an even distribution by quarter over the year,
each quarter would result in 36,000 panels being replaced at a
cost of $223,920 and the printing of inserts will add an additional
cost of $3,960 for a total replacement cost of $227,880.
5. Cart Rentals to Supermarkets The Company will enter into a
five-year contract with each supermarket chain to ensure
longevity for its advertisers. Under this contractual commitment,
the Company will pay the supermarket chains 10% of the gross
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revenue each quarter for the rental of space on a grocery cart.
6. Marketing, Sales, and Commissions The Company has
contracted with a media company to handle all marketing
materials and advertising, their budget for the first year is
$2,500,000. And has contracted with an advertisement sales
company that is responsible for booking the advertisements, their
budget for the first year is $2,000,000. The Company has allowed
for a 15% Commission to be paid to the advertiser in the form of
a discount or in some cases paid to their ad agency of record.
Quarter Marketing & Advertising Bookings Adverstisers
15% Commissions Total
1st $ 625,000 $ 500,000 $ 1,458,000 $2,583,000
2nd 625,000 500,000 3,645,000 4,777,000
3rd 625,000 500,000 5,382,000 6,957,000
4th 625,000 500,000 8,019,000 9,144,000
$ 2,500,000 $2,000,000 $18,954 000 $23,454,000
7. Grocery Store Operations The Company has contracted with
ITG Retail Services Group LLC., a company that has
relationships with most of the leading grocery chains in North
America. ITG’s responsibilities include signing up the various
grocery chains (see note 5 above), installing the advertisement
display device and changing the advertisements inserts. The cost
to perform this service is as follows:
Signing up the store $ 1.00 per cart
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Per annum, store contract fee $0.50 per cart
Installation of Ad Holder $2.00 per cart
Changing the Advertisement $0.50 per cart
Based on 240,000 carts being commissioned each month from
1,200 new stores being introduced into the system, there is a
charge for signing up the stores of $240,000 per month or a
quarterly charge of $720,000.
Based on a per annum store contract fee for the number of carts
employed each month, there is a charge of $120,000 per month
or $360,000 per quarter.
The installation of Ad Holders is $2.00 per cart. With 1,200 new
shores using the Company’s advertising system each month and
each store has 200 shopping carts in use this results in 240,000
installations each month. This would result in $480,000 being
paid each month to the Distribution company performing this
service for the Company.
It is estimated that advertising will be changed on a quarterly
basis. As noted above the cost to change the advertisements is
estimated at $0.50 per Ad Holder. The following represents the
cost to change the advertisements:
Month Number of new Cart at End of Month
Number of new Cart to be Changed Each Quarter
Monthly Cost to Change Advertising
Gross Quarterly Expenses
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lst 240,000 – –
2nd 240,000 – –
3rd 240,000 – –
4th 240,000 240,000 120,000
5th 240,000 240,000 120,000
6th 240,000 240,000 120,000
7th 240,000 480,000 240,000
8th 240,000 480,000 240,000
9th 240,000 480,000 240,000
10th 240,000 720,000 360,000
11th 240,000 720,000 360,000
12th 240,000 720,000 360,000
The total cost of maintenance and service each quarter based on
the above figures is as follows:
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Quarter Signing up Fee
Store Contract Fee
Installation of Ad Holders
Changing of Adverstisements
1st $ 720,000
$ 360,000 $ 1,440,000 $ – $2,520,000
360,000 1,440,000 360,000 2,880,000
360,000 1,440,000 720,000 3,240,000
360,000 1,440,000 1,080,000 3,600,000
TOTAL $2,880,000 $ 1,440,000 $ 5,760,000 $ 2,160,000 $12,240,000
8. Accounting and Audit The accounting functions required are as
Ensuring the revenue derived from each advertiser and/or ad-
agency is received and deposited on a timely basis;
Administering monthly payroll, creditor invoices and expense
Preparation of quarterly financial statements to meet listing
Ensuring adherence to budgetary requirement.
It is assumed an accountant will be hired initially to set up the
accounting, payroll and other office functions. This person will be
paid $6,000 per month, which will include the preparation of all
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filings with regulatory bodies. It is assumed a junior clerk will be
hired in the last quarter to assist with filing and other work around
the office. This junior clerk might be a part-time accountant
initially and later in the second year would be hired full time.
Salary compensation for this clerk will be $2,000 per month in the
last quarter. Therefore, the first three-quarters will bear a cost of
$ 18,000 and the last quarter will have a cost of $24,000. In
addition, to the estimate of salaries, the will be a cost for the
year-end audit to meet the listing requirements of regularity
bodies. It is estimated this audit will cost the Company
9. Advertising The Company will advertise extensively in trade
journals, newspapers and other media such as the following:
Leasing top 10 Advertisement Agency magazines in the United
States which specialize in the food and grocery industry and are
distributed to the top Ad-Agencies monthly;
Packages of advertising material to the top of grocery store
chains in the country;
Brochures and pamphlets will be sent to the 3 top executives in
35 grocery chain stores in the United States;
Advertising packages will be sent to the top 100 food
manufacturing companies which will be directed towards the
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Other media to be identified as required.
The cost of printing and assembling of brochures and pamphlets
is estimated to be $35.00 each. A minimum of 1,500 brochures
will be used during the first year for a total cost of $52,500. For
simplicity, this cost will be spread evenly over the four quarters.
Advertising in magazines and periodicals is a major cost but this
form of advertising will alert advertisers and their agents to the
services being offered by the Company. It is estimated each
article in a magazine will cost approximately $3,500. If
advertisements are placed in the top 10 Ad-Agencies magazines,
each results in a monthly cost of $35,000 or $105,000 for each
quarter. Total advertising costs for each quarter, including
brochures and pamphlets, is $118,125.
10. Automobile Expenses Automobiles will be leased for the top
three Executives at $6,000 per quarter.
11. Bank Charges Bank charges will represent the transfer of funds
from various advertisement agencies in payment on behalf of
their clients, monthly service charges, etc. It is assumed this cost
will be $500 per quarter.
12. Entertainment and Promotion Entertainment and promotion
mainly covers the cost of “wining and dining” advertisement
agents and other media personnel and on occasion holding
seminar-style meetings. Since money must be spent in this area
to create a willingness to use the Company’s display panels, it is
estimated that $10,000 a month will be allotted. This results in
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$30,000 a quarter.
13. Insurance Insurance coverage will have to be obtained for
general liability, office contents, directors’ liability insurance and
gross profit protection. Additional insurance will be carried for
protection in the event a malfunction of the display unit causes
harm. The chances of this ever happening is extremely remote.
Insurance coverage is estimated $25,000 per quarter.
14. Legal Legal costs are associated with preparation of advertising
contracts with the supermarket chains, advertising agencies and
advertisers themselves as well as employee contracts and
various other contracts as required. In addition, legal services will
be needed for the filing of the documents with the regulatory
bodies. Legal expenses will vary depending upon the needs of
management. For conservative purposes, legal expenses have
been assumed at $10,000 per month or $30,000 per quarter.
15. Management Fees Management fee comprises the following
Position Annual Remuneration Quarterly Remuneration Monthly
President $ 120,000 $ 30,000 $ 10,000
Vice-President – Marketing 9,000 22,500 7,500
Treasurer/Controller 80,000 20,000 6,667
Total $ 290,000 $ 72,500 $ 24,167
16. Office and Sundry Office and sundry expenses comprise
photocopying paper, office supplies, envelopes, binders, coffee,
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pens and pencils, computer tapes and paper, postage, filing
cabinets, adding machines and other items of lesser dollar value
which are normally required in an office. Initially, the cost of
starting two offices; one in the eastern part of the United States
and the other in the western part, which will require a greater
outlay than in subsequent months. Therefore, the following has
been budgeted by quarter:
First Quarter $ 15,000
Second Quarter $ 9,000
Third Quarter $ 12,000
Fourth Quarter $ 15,000
17. Public Relations Public relations are a high priority for
management. Public relations firms will be hired to search for new
institutional investors and to prepare the required information to
be circulated monthly to current and potential shareholders.
There will be a constant need to inform the public-at-large and
private institutions of the Company’s achievements and its
direction in the future. It is projected, as a minimum, the quarterly
charge for public relations will be approximately $100,000. In
future years with more stores being added to the client base, the
public relations budget will be increased substantially.
18. Rent The Company will require two offices; one located in the
East and the other located in the West. The offices will not have
to be large in space since limited personnel will be required to
manage the operations. Nevertheless, the executives will each
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require an office, a boardroom for meeting customers and
advertising agents, an office for accounting, a reception area,
storage facilities and a general working area. The building does
not have to be a class A rating and can be located outside of the
busier section of a city. Therefore, estimated rent expenses each
month will be $5,000 for each of the two buildings for a total of
$10,000 per month.
19. Salaries and Benefits The accountant’s and assistant
accountant’s salaries have been covered under Accounting and
Auditing noted fewer than 8 above. There are employees other
than the aforementioned; being two receptionists, two girl fridays
and two account representatives to sell the advertising. Other
employees will be hired either on a part-time basis or else as
demand requires. The estimated cost of the above-noted
employees is as follows:
Personnel Monthly Salary (i)
Employee Benefits (ii)
Executive Secretary $ 3,000 $ 600 $ 3,600 $ 10,800
2 Girl Fridays $ 4,000 $ 800 $ 4,800 $ 14,400
2 Receptionists 3,000 600 3,600 10,800
2 Account Representatives 10,000 2,000 12,000 36,000
Total $ 72,000
(i) Monthly salaries are distributed as Fallows:
Executive Secretary $ 3,000 per month
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Girl Friday $ 2,000 each per month
Receptionist $ 1,500 each per month
Accountant Representative $ 5,000 each per month
(ii) It is assumed employee benefits will be 20% of the salaries
paid. The type of benefits available to the employees will be
dental, extended health and life insurance. The Company will
absorb one half the cost and the employees will be responsible
for contributing from their salaries the balance.
20. Stationery and Printing Office stationery will be purchased
during the first quarter in sufficient quantities to last the entire
year. Said cost is estimated at $10,000. Printing expense will
comprise mainly office photocopying since the brochures and
pamphlets are covered in section 9 – Advertising above and the
inserts are covered under section 3 – Printing of Inserts.
21. Telephone and Fax Telephone and fax charges will be relatively
constant over the year. For conservative purposes, telephone
charges for the two offices are estimated at $3,500 per month or
$10,500 per quarter.
22. Travel and Accommodation Travel cost for the executives and
account representatives is relatively high due to the nature of the
business. Initially, the main travel will be based in the United
States but eventually, consideration will have to be given to
extending travel to include the European countries where the
Company has obtained patent protection for its display panel. It is
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anticipated this will occur in the last quarter of the year. As the
year progresses, traveling in the United States will increase.
Therefore, it is anticipated travel costs will be $10,000 a month
for the first quarter, increasing by 100% for each of the second
and third quarters. In the last quarter, it is anticipated to travel
locally in the United States will amount to $35,000 per month with
the added cost each month of trips to Europe. The European trips
are estimated to add an addition $10,000 per month to the travel
costs. Therefore, travel costs by quarter are calculated as
First Quarter $ 30,000
Second Quarter 60,000
Third Quarter 90,000
Fourth Quarter 135,000
These attached schedules are an integral part of
this Projected Statement of Net Income
Brand Name versus Generic Stocks
Brand Name Stocks Generic Stocks
Less information risk More information risk
Higher quality of information Lower quality of information
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Large sample of consensus estimates Small or no sample of consensus estimates
Monitoring service or fee No monitoring service or fee
Lower return Higher return
Higher price (premium) Lower price (discount)
Lower uncertainty Higher uncertainty
More consistency Less consistency
Supplemental information is provided in. The first graph illustrates the
price per share for PPMC common stock for the time period August
20, 2003, through September 27, 2004. The latter date represents the
specific event when PPMC filed their 10QSB. The second graph
compares the PPMC price per share with comparable index
measures, such as the Dow Jones Industrial Average, Standard and
Poor’s 500, NASDAQ, and Russell 2000 indices, for the same period
An image of a graph depicting the price per share for PPMC common
stock, August 20, 2003 through September 27, 2004, when PPMC
filed their 10QSB.
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The price per share for PPMC common stock, August 20, 2003
through September 27, 2004, when PPMC filed their 10QSB
An image of a graph depicting the comparison of the PPMC price per
share over comparable index measures, such as the Dow Jones
Industrial Average, Standard and Poor’s 500, NASDAQ, and Russell
2000 indices, for a period from August 20, 2003 through September
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Comparison of the PPMC price per share over comparable index
measures, such as the Dow Jones Industrial Average, Standard and
Poor’s 500, NASDAQ, and Russell 2000 indices, for the same time
Arbel, A. 1985. Generic Stocks: An old product in a new package. The
Journal of Portfolio Management 68: 4–13.
Arbel, A., Carvell, S., and Strebel, P. 1983. Giraffes, Institutions and
Neglected Firms. Financial Analysts Journal 39: 57–63.
Arbel, A., and Strebel, P. 1982. The Neglected and Small Firm
Effects. The Financial Review: 201–18.
Arbel, A., and Strebel, P. 1983. Pay attention to neglected firms! The
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Journal of Portfolio Management 9: 37–42.
Business Wire. 2003. Purchase Point Media Corp.: Corporate Update
Cataldo, A. Information Asymmetry: A Unifying Concept for Financial
and Managerial Accounting Theories (including illustrative case
studies). Studies in Managerial and Financial Accounting 13, 2003.
Oxford, England: Elsevier Science (JAI). Series Editor: Marc Epstein.
The project requires three steps to be presented.
Step 1 – Identify Form and Substance Errors.
Step 2 – Compute the Purchase Point Media (PPMC) break-even
points in terms of carts and stores.
Step 3 – Determine the number of grocery stores for various food
In one Word document, provide individual sections for each Step. This
Word document along with the Excel file (described below for Step 2)
will be uploaded when you click on the Take Exam button on your
Student Portal to submit your project (described under the “Submitting
Your Assignment” later in the instructions).
This Senior Capstone project highlights your knowledge and the skills
you have developed over the course of your education. There is
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nothing “new” to be learned here.
The knowledge and skills required for this project include English
Composition, Financial Accounting, Managerial Accounting,
Information Literacy and the abilities to think critically, do research and
to present your work in a professional manner.
If you are unsure or don’t understand something about the project,
then go back to your previous subjects to review. For example, if you
don’t remember how to make a proper citation, then revisit your
English Composition to see how to make a correct citation. Or, if you
don’t remember how to calculate a break-even point, go back to
Managerial Accounting and review the subject matter pertaining to
Remember, there is nothing “new” here. Everything about this project
you should already know how to do.
Substance Versus Form and Critical Thinking
In the infamous Enron bankruptcy case, the form of the financial
statements prepared by the Enron Corporation and WorldCom was
very professional; however, the substance was lacking, leading to
audit and market failures and the eventual bankruptcy of both of these
big-cap, or large capitalization firms. PPMC represents a reverse
case, in which the form of the data contained in the PPMC news
release and corporate Website was very poor.
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To begin, read the PPMC report, focusing on problems with the form
of the report. (“Form” means spelling, punctuation, and capitalization
are correct and that the text is grammatically correct. Also, form
means that the format of the text as far as font, bold, underlining,
indents, and so on are correct.) Prepare a typed, clearly
communicated summary of all errors or weaknesses you find in the
form of this report. This should be a numbered list. There are well over
30 form errors in the document. (The ways to go about doing this for
this step is to think of yourself as an English Composition instructor
and a student has turned in a required paper that was written.)
Although the PPMC report isn’t well-written, don’t attempt to rewrite
the report. Only present a numbered list of the errors found.
To report the numbered list of form errors for this step, each error
should have three components:
1. The location of the error.
2. What the error is.
3. How the text should have been written correctly.
Here is an example of how you’ll present the form errors.
Summary of Errors in the Form of the PPMC Report
The first page of Exhibit 1, the last sentence of the first paragraph
states “You should independently investigate and fully
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understand all risk before making investment decisions.”
The word risk is singular. It should be plural.
It should have been written, “You should independently
investigate and fully understand all risks before making
Next, reread the PPMC report, focusing on problems with the
substance of the report. (“Substance” means the figures and data that
are being reported and making sure the math is correct.) Identify the
obvious errors or problems first by focusing on the addition or math
errors. Prepare a typed, clearly communicated summary of all the
errors you find in the substance of this report. These should be
presented in a numbered list.
To report the numbered list of substance errors for this step, each
error should have three components the same as the presentation of
the form errors:
1. The location of the error.
2. What the error is.
3. How the text should have been written correctly.
The heading for the substance errors should be “Summary of Errors
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in the Substance of the PPMC Report”.
Do not take this step lightly. The data and figures found in the report
are used to calculate the break-even analysis for Step 2. As
presented, the data is incorrect and therefore, the break-even analysis
would be incorrect. Therefore, it is important that you find “all” of the
substance errors and correct them as these corrected figures will be
what you use to make the break-even calculations for Step 2.
The PPMC Notes in the document appear to be organized by cost
behavior. This is similar to the approach you used in your Managerial
Accounting course. You should follow this approach or framework as
you compute the PPMC breakeven point in terms of carts and stores.
Begin with revenues, follow with variable costs (VCs), develop the
contribution margin (CM; in aggregate), followed by fixed costs (FCs),
and, finally, compute PPMC’s net operating income (NOI) and break-
even point in terms of both carts and stores.
At the beginning of the assignment, on the right-hand side under
“Optional Study Materials” select the “PPMC Excel Spreadsheet”
menu item to download the required Excel spreadsheet.
Step 2 requires that you calculate the break-even points for both carts
and stores. Download this file and use it to calculate the breakeven
Reference the Excel spreadsheet for Step 2 in the Word document
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and include the spreadsheet as a separate file when submitting the
project. The spreadsheet for the calculations is too large to include in
a table in a Word document or be able to read if an Excel spreadsheet
is inserted. Therefore, there should be two files submitted for the
project – this Word document and the Excel spreadsheet with your
work for Step 2.
The majority of the work has been done for you when using the
spreadsheet. The setup to be able to calculate the CM, NOI and the
break-even points are part of the spreadsheet. What you need to do to
interpret the Notes from the PPMC document, input the data into the
spreadsheet (be sure to use your “corrected substance” figures/data
from Step 1), and do the calculations required to obtain the break-
even point for the carts and the break-even point for the stores. (Hint:
Some cells in the spreadsheet have comments inserted. Pay attention
to these comments. For example, there is a comment in a cell that has
the formula to be used to calculate the break-even point.)
Step 3 requires three items:
1. The ticker symbol for the store chain.
2. The number of stores for the store chain.
3. A Works Cited page for the figures found as the number of
Table 1 should be reproduced as a table in your Word document for
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Step 3 and the ticker symbol and the number of stores inserted from
your own research.
To find the ticker symbol for each of the store chains, it is as easy as
opening up Google Chrome as your web browser and typing in the
store name followed by “ticker symbol” into the search box. The hits
form the search should reveal the ticker symbol for that store.
Alternatively, you could use a financial website such as Yahoo
Finance, E-trade, and so on to do your searching. All of the stores
have a ticker symbol with the exception of one which is a private
Using your own research skills and abilities, determine the number of
grocery stores for each store chain. How you go about doing this is up
to you and your research skills.
Here is what you are looking for as far as the number of stores is
You are looking for the most “current” information. However,
current doesn’t mean today.
For example, if store A (which has 10 stores) took over store B
(which had 3 stores) in a merger, then B is no longer in business.
The number of stores for A will be 13 as of today because it is still
in business. The number of stores for B will be 3 which is how
many it had before the merger. That is the most current for B –
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As another example, if a store declares bankruptcy, it all depends
upon the bankruptcy status. If the store is in Chapter 11, which is
reorganization then the number of stores will be the current
information. If the store is in Chapter 13, which is a closing of the
business, then the number of stores will be zero.
Be aware that the solution to the number of stores in the table is
kept current, but that doesn’t mean that data will all be “as of
today.” It is possible that the most current information might be
2015 or 2016. It all depends upon your research and what is
available. Finding the correct information is the purpose behind
One other thing to watch out for in doing your research is a
“name change.” If a store changes its name, then list both the old
name and the new name and the current information available for
the number of stores.
You should rarely use third-party sites such as Google Finance,
InvestSnips, Investopedia, Wikipedia, newspaper articles, and so
on as these don’t have the most current and accurate information.
You should use information from the business website, SEC
filings, Annual Reports, and so on for the most applicable,
relevant and current information.
Lastly, this step involves research. “Research” is not doing a
quick search and picking a website or two and going with what is
found. Research is looking at quite a few sources and thinking
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critically about what is found as to relevancy, currency, and
accuracy. For example, one web page may say “about 500”
stores, but, another page on the website will say “536 stores”
exactly. Or one website might have information from March 2016
and another might have information from December 2016. Which
is more current and relevant? The December 2016 web site. Not
only do you need to do research, but, you also must think
critically about the information you find.
Along with Table 1, a Works Cited page needs to be included for Step
3. This is Standard English Composition. Work and/or figures that are
not your own need to be cited as part of a paper.
If no citations are provided or the citations are not properly formatted,
this becomes “Plagiarism” which is unacceptable at Penn Foster or in
There should be a correctly formatted citation for each figure for
the number of stores for the grocery store chain. This is standard
for English Composition and should follow APA formatting. If you
do not remember how to make a properly formatted APA citation,
go to the Purdue OWL (Online Writing Lab) website by doing the
do a search on the Internet for “Purdue OWL” and go to the
in the menu on the left, click on “Research and Citation”
from the drop-down menu click on “APA Style”
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then click on “APA Formatting and Style Guide”
finally, select “Reference List: Electronic Resources
Alternatively, you can telephone and speak to an English Instructor.
The web address provided for the citation should take the reader
directly to the web page where the number of stores can be
found. The reader should not have to search for your information.
Do not provide a generic web address such as the homepage of
a website unless the actual number of stores is on that web page.
Stock Ticker No. of Stores Firm Name
Publix Super Markets
Great Atlantic & Pacific
Smart & Final
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Whole Foods Market
Wild Oats Markets
Eagle Food Centers
Village Super Market
Refer to the “Submitting Your Work” section at the end of this book for
details on submission requirements for the PPMC Case assignment.
Your assignment will be evaluated according to the following criteria:
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Content 80 percent
Written Communication 10 percent
Format 10 percent
Content 80 pts
Identifies Form and Substance errors as instructed (worth 30 points) Completes Step 2 – Compute the PPMC break-even point in terms of carts and stores (worth 40 points) Completes Step 3 – Determine the number of grocery stores in the United States (worth 10 points)
Written Communication 10 pts
Answers each question in a complete paragraph that includes an introductory sentence, at least four sentences of explanation, and a concluding sentence Uses correct grammar, spelling, punctuation, and sentence structure Provides clear organization by using words like first, however, on the other hand, and so on, consequently, since, next, and when Makes sure the paper contains no typographical errors Properly formatted citations – (No Works Cited or incorrectly formatted citations will result in a final grade of 1 for the project due to Plagiarism.)
Format 10 pts The paper is double-spaced, typed in font size 12, and contains properly formatted Internet research sources. It includes the student’s
Name and address Student number, Course title and number, and project number
Total Grade %
BUS450 Discussion Board 2
Below are important details about the online discussions that will allow
you to interact with other students and faculty members. This
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interaction can greatly benefit anyone studying online. By participating
in these interactions, you can learn from and encourage others while
progressing through your studies.
Note: Once you access a discussion board on your student portal, you
may be unable to return to your portal or access your course materials
until you post a response to the discussion board. You can return to
the discussion board later to edit your post once you’ve had a chance
to review your course materials.
1. Access a Discussion Board on your student portal.
2. Choose a User Name. (It’s suggested that you use your first and
3. Pick the major word or words as your subject, type in your
response, and then click on Create New Message to post your
4. Once you’ve posted your initial response, you’ll be able to see
your classmates’ responses. You need to respond to two (2) of
5. After you have chosen and clicked on your classmate and
decided this is the one you want to respond to, click on Post a
reply to this message.
6. Type your response and click on Post Reply to Board.
Remember, you must respond to two (2) other students.
Note that the discussion board system will automatically time out after
20 minutes, and any unsaved work will be lost. It’s highly
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recommended that you write your answers to the discussion board
prompts in a Word document, and then copy and paste your answers
into the discussion board window when you’re ready to submit.
What Are the Requirements?
1. The day you receive the course materials marks the start of your
first lesson. At this time, you should introduce yourself to your
classmates and instructor. Please be sure to return to the
discussion to welcome others.
2. Thereafter, for each prompt, you are required to complete the
readings and then answer the prompts for the lesson that you’re
completing. Your answer to the discussion prompt should be at
least five (5) to seven (7) fully-developed sentences.
3. You must also read the posted answers from other classmates
and select two (2) of those other posts. You will then respond to
those two posts by commenting on them academically. These
responses are known as peer responses. Each of the two peer
responses needs to be at least five (5) to seven (7) fully-
4. The discussion questions are based on the course material
you’re studying. However, you should also expect that you will
need to conduct some outside research when developing your
answers and peer responses. All postings are expected to be in
well-developed paragraphs with proper sentence structure and
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How Are the Discussion Posts Evaluated?
Answers to the posted questions and peer responses that do not meet
all of the mentioned requirements will not count toward the grade.
Additionally, use the following rubric to assess and improve your
postings before putting them on the discussion board.
Timely Student shares in the discussion boardand posts a main post and two replies. Student does not post.
Collaborative and Significant
Positive responses to the work of others with pertinent and original insights. No attempt to dominate conversation. Multiple postings on same topic contribute to the flow of conversation.
Offers inadequate responses to the comments of others; short or without new ideas. Posting does not advance the substance of the conversation. One or fewer postings per assignment.
Includes analysis or synthesis of course materials, own experience, and/or colleagues’ postings. Includes citations to external materials of high academic quality (peer reviewed). Thoughtful, academic and stimulating. Pertinent to the assigned topic and also brief.
No evidence of cognitive processing of course material nor of analyzing own experience through the lens of course materials. Posting isn’t directly relevant to assignment.
Clarity, Grammar, and Spelling
No errors. Statements always comprehensible.
More than four errors that impede understanding.
When Are the Discussions Graded?
Grades are automatically posted; however, instructors are monitoring
the boards and will reach out to you when a posting grade is being
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What If I Fall Behind on My Postings?
You will not move onto your next class until all discussions are
complete. If you earn an F on a discussion, it is asked that you follow
the email instructions received from your instructor and that you redo
How Can I Contact the School?
You can email instructors through the Contact Us link when logged
onto the Penn Foster website.
PPMC Excel Spreadsheet
READING STUDY MATERIAL
Click the link to download the PPMC Excel Spreadsheet
PPMC Excel Spreadsheet (lessons.pennfoster.com/pdf/500895_PPM
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- Lesson 2 Overview
- Case Background
- Supplemental Information
- Brand Name versus Generic Stocks
- Project Requirements
- Substance Versus Form and Critical Thinking
- Step 1
- Summary of Errors in the Form of the PPMC Report
- Step 2
- Step 3
- Writing Guidelines
- Grading Criteria
- What Are the Requirements?
- How Are the Discussion Posts Evaluated?
- When Are the Discussions Graded?
- What If I Fall Behind on My Postings?
- How Can I Contact the School?