Case

Name:

Financial Analysis Rubric
Description: This rubric will be utilized in grading Financial Analysis submissions

Does not meet criteria Meets criteria Exceptional

Reasonable
estimate of
Sales Price for
Tickets

Points:
0 (0%)
Student does not
determine the sales price
for a ticket.

Points:
3 (3%)
Includes sales price but it does
not meet the majority of the
“exceptional” criteria.

Points:
5 (5%)
Includes reasonable sales price using strategies
and objectives from the course, citing clearly to
the course material and illustrating its use. Also
researches at least 3 competitors’ prices as a
benchmark for pricing.

Expenses
clearly
explained in
essay

Points:
0 (0%)
Expenses are not
explained in essay.

Points:
15 (15%)
Student makes a good effort
explaining some of the expenses
presented but does not meet the
majority of the “exceptional”
criteria.

Points:
25 (25%)
Each cost estimate has been researched with
source included in footnotes throughout and all
major costs are identified and clear. Any
assumptions are identified and explained.

Break Even
Analysis
Properly
Conducted

Points:
0 (0%)
Student does not
conduct break-even
analysis.

Points:
10 (10%)
Break even analysis is conducted
but is not accurate and does not
demonstrate a clear
understanding of the learning
concept.

Points:
15 (15%)
Break even conducted correctly to determine
units/services needed to sell year one to break
even based on fixed and variable expenses and
price of good/service demonstrating a clear
understanding of this learning concept.

Location
identified and
supported with
clear reasoning

Points:
0 (0%)
Student does not identify
and support with clear
reasoning a location and
venue in Maryland.

Points:
3 (3%)
Student identifies a location and
venue for the party in Maryland
and supports it with some data to
support his/her reasoning.

Points:
5 (5%)
Student identifies a location and venue for the
party in Maryland and supports it clearly with
comprehensive data to support his/her
reasoning.

Sales
Projections
(revenue)

Points:
0 (0%)
Student does not
complete sales
projection.

Points:
3 (3%)
Student projects revenue but
rationale is not clear.

Points:
5 (5%)
Projected revenues supported based on logical
reasoning for price of ticket and expected sales
and explained clearly in essay using projection
methods from the course.

Income
Statement (not
part of page
limit)

Points:
0 (0%)
Student does not include
income statement.

Points:
5 (5%)
Student includes income
statement for first year of
business but it does not meet the
majority of the “exceptional”
criteria.

Points:
10 (10%)
Income statement is reasonable in its projections
of sales revenues, identification of a
comprehensive and complete list of expenses,
and properly calculates net profit/loss.

Using PICK
Analysis, uses
course
concepts,
research and
data to support
claims as
necessary,
which are cited

Points:
0 (0%)
Works cited are not
included. Course
concepts are not applied
using PICK Analysis.

Points:
8 (8%)
Works cited are included but are
not clearly noted in footnotes as
required. Some course concepts
are applied.

Points:
15 (15%)
Works cited are included and are clearly noted
using footnotes as required. Multiple course
concepts are applied throughout the submissions
using PICK Analysis.

Does not meet criteria Meets criteria Exceptional

with footnotes
throughout

Paper free of
grammatical
errors/typos

Points:
0 (0%)
There are multiple typos,
formatting, and/or
grammar issues in paper.

Points:
3 (3%)
There are minor typos,
formatting, and/or grammar
issues in paper.

Points:
5 (5%)
There are not typos, formatting, nor grammar
issues in paper.

Paper is
organized and
has clarity

Points:
0 (0%)
Student presents
information in a
disorganized and unclear
manner, making it
difficult to interpret the
information put forth.

Points:
3 (3%)
The paper is somewhat clear and
concise, but not consistently
throughout the paper.

Points:
5 (5%)
The paper is clear and concise consistently
throughout its entirety, and is well organized.

Meets page
requirements
(2 full pages,
no more than 3
excluding
income
statement)
using single
spacing,
1”margins and
12 point font

Points:
0 (0%)
There are less than 2
single spaced substantive
pages submitted.

Points:
5 (5%)
At least 2 and no more than 3
substantive pages submitted.
However, pages lack substantive
information sufficient to
comprise the 2 page requirement
(e.g., large pictures, graphs,
spacing quotes take up too much
space).

Points:
10 (10%)
At least 2 and no more than 3 substantive pages
submitted. Income statement is not included in
the page count.

Submitted
timely via
Blackboard in
or x
format

Points:
0 (0%)
Not submitted in correct
format.

Points:
0 (0%)
Per the syllabus, there may be up
to a 20% grade reduction per day
for late submissions.

Points:
0 (0%)
Submitted before required deadline and in
proper format.

Common Mistakes: Financial Analysis Assignment
• Not including at least three competitors prices
• Not conducting any outside research for prices for all expenses
• Incorrect Break Even Analysis
• Choosing a venue or location without research
• Incorrect Sales Projections
• Incorrect Income Statement
• Works cited not included
• Not applying course concepts throughout using Pick Analysis

Anonymous 1

1. The cost of a ticket to my jazz party is $59.99. I came up with this price using two pricing
strategies. First I used the competitive pricing strategy, which is defined as reducing “the
emphasis on price competition by matching other firms’ prices” (Boone, p. 417). Second, I used
the odd pricing strategy which is defined as a “pricing method using uneven amounts,” (Boone,
p. 419) so that consumers would be more likely to purchase a ticket because the cost seems less
than it actually is (Boone, p. 419). In benchmarking the ticket prices of competitors, there are
several competitors to for this jazz party. One competitor would be the Bethesda Blues and Jazz
Supper Club which charges $20 to $50 depending on the musician for admission (“Music
Calendar”, n.d., p. 1). For the purposes of this paper, I will assume the average cost is $35 for
admission by taking the average of those two prices ($20+$50= $70/2= $35). It is important to
note that the admissions ticket does not include food or drink costs. Based on the menu available
on their website, Bethesda Blues and Jazz Supper Club charges approximately $11 for
appetizers, $28 for a main course and $10 for dessert (“Dining”, n.d., pp. 1-4). Drink prices were
unavailable. Another competitor would be the Blues Alley D.C. Jazz Club which charges $25 to
$45 depending on the musician for admission (“Events”, n.d., p. 1). For the purposes of this
paper, I will assume the average cost is $35 for admission by taking the average of those two
prices ($25+$45=$70/2=$35). Food and drink are not included in that price. Based on the menu
available on their website, Blues Alley D.C. charges roughly $9.50 for appetizers, $22 for a main
course and $7 for dessert (“Menu”, n.d., pp. 1-6). Drink pricing is not available. A third
competitor would be the Bohemian Caverns Jazz Club in D.C. which charges a standard $20
admission fee (“Tickets”, n.d., p. 1). Food and drink are not included in the admissions cost.
Based on the menu available on their site, they charge $8 for appetizers, $16 for main courses
and $5 for sides (“Menu”, n.d., pp. 1-5). Pricing for desserts and drinks were not available.

We have several distinct competitive advantages that separate us from the competition
(Boone, p. 8). One competitive advantage is that we include food and a drink in our ticket price.
You don’t have to worry about additional expenses just pay your admission fee at the front door,
and you are all set for a great evening. Our second competitive advantage is that we are
competitively priced when you factor in both the cost of food and admission. Our three
competitors charge roughly $35, $35 and $20 for admission which averages out to $30 for
admission ($35+$35+$20=$90/3= $30). In addition, they charge extra for food including a main
course and a dessert which averages out to $33.50 ($22+$7=29 (Bethesda Blues and Jazz Supper
Club). $28+10=$38 (Blues Alley D.C. Jazz Club). So, $38+$29=$67. 67/2= $33.50). I did not
include Bohemian Caverns Jazz Club for comparative food pricing since dessert pricing was not
available. I assumed that a non-alcoholic beverage would cost about $3 at these competitors. All
in all, $30 admissions + $3 non-alcoholic beverage + $33.50 including main course and dessert =
$66.50. So $59.99, our price, is $6 less than theirs so we are competitively priced since we cost
less than our competitors when you factor in food and beverages costs in addition to the
admissions price. Our third competitive advantage is where we are located. We are 1 block from
the Bethesda Metro Station, and there are 2 large parking garages within 1 block as well making
it extremely convenient for people to come.

2. My fixed costs are those costs that remain constant regardless of the number of people
who attend (Boone, p. 415). An example would be the facility I am renting the Bethesda Round
House Theatre which is $350 an hour (“Facility Use”, n.d., p. 1). I plan for the jazz party to be
from 7-11 p.m. with the jazz band playing from 7:30-9 p.m. Then dinner from 9-10:30 p.m. and

Anonymous 2

the jazz band finale from 10:30-11 p.m. I believe I would need to rent the facility for at least 1
hour before and after the show to allow people to set up and cleanup. So my total cost would be
$350×6 hours which equals $2,100. In addition, I would need to buy a couple of cash registers to
process people’s payments at the door. I would have 3 cash registers to process people quickly. 3
registers at $59.99 each would cost me a total of $179.97 (Staples, n.d., p. 1). I would pay 3
people minimum wage, which is $8.40 an hour in Montgomery County according to the state of
Maryland’s DLLR, to man the registers for 1.5 hours (“Minimum Wage”, 2015, p. 1). I don’t
believe I would have much difficulty finding three people who would work for 1.5 hours at $8.40
an hour because of the location of my party. Bethesda Round House Theatre is located 1 block
from the Bethesda-Chevy Chase High School, and I think three high school students would
eagerly work 1.5 hours to earn some money. They could take that money to go to a movie in
downtown Bethesda or go out to Chipotle for dinner afterwards. I would also hire 3 off duty
Montgomery County Police Officers to watch the cash registers, but also to act as security if
need be. Based on my personal knowledge, I know officers make time and a half for off-duty
work so given that an officer makes $48,981 a year and then divide that by 52 weeks in a year
and then divide that by 40 hours a week you get a hourly rate of $23.55 (Montgomery County
Police, n.d., p. 1). At time and a half it would cost $35.33 an hour per officer. I would hire 3
officers for 5 hours each so my cost would be $529.95 ($35.33x5x3=$529.99). A band costs
approximately $750-$1500 for a four hour time slot (Sam Hill Entertainment, n.d., p. 1) For the
purposes of this paper, I will assume the average cost is $1,125 for the band by taking the
average of those two prices ($750+$1500=$2,250/2=$1,125). I am also allocating $1,000 for
various types of advertisements and decorations.

Table 1:

Fixed Costs Hourly
Rate/Cost

Quantity (how
many people)

Duration
(hours)

Total Cost

Rent Facility $350.00 1 6 $2,100.00

Off-duty Police
Officers

$35.33 3 5 $529.95

Cashiers $8.40 3 1.5 $37.80

Cash Register $59.99 3 N/A $179.97

Band $1,125.00 1 4(contract min) $1,125.00

Advertising
and
Decorations

$1,000.00 1 N/A $1,000.00

Total Fixed
Costs:

4,972.72

Anonymous 3

My variable costs are those cost that vary depending on the number of people that attend
(Boone, p. 415). I would use Gist Family Catering which charges $18.50-$20 per person so I will
assume the average cost per person would be $19.25 ($18.50+$20=$38.50/2=$19.25) (“Lunch
and Dinner Menu,” n.d., pp.1-3). So assuming I sell 400 tickets, $19.25×400 would be $7,700.
This per person price includes a drink (punch), several main courses to choose from along with
several sides, dessert and paperware (“Lunch and Dinner Menu,” n.d., pp.1-3). Each server is
$110.00 for up to 5 hours (“Lunch and Dinner Menu,” n.d., pp.1-3). Based on internet research,
you generally need 1 server per 20 people (A Tasteful Affair, n.d., p. 1). So if I have 400 people
attending, I need 20 servers which would cost $2,200 (400/20=20) ($110×20=$2,200). I would
also need tables and chairs. A 72” round table sits approximately 11 people and costs $14.20 to
rent each table, and each chair costs $1.45 (A to Z Party Rental, n.d., p. 1). So assuming 400
guests, 400 chairs would cost me $580.00 and since a table costs $1.29 per person it would cost
me $516.00 ($1.45×400=$580. $14.20/11=$1.29 per person for a table. $1.29×400=$516)

Table 2:
Variable Costs Per person

Cost
Quantity Total Cost

Food and
Drink

$19.25 400 $7,700.00

Servers $110.00 20 $2,200.00
Chairs $1.45 400 $580.00
Round Tables $1.29 400 $516.00
Total Variable
Costs

10,996.00

3. A breakeven analysis is used “to determine the minimum sales volume a product must
generate at a certain price level to cover all costs” (Boone, p. 415). Break even= fixed costs/(avg
sale price per unit- avg variable cost). My fixed costs are $4,972 please see table 1 and table 2 at
above for a detailed break down. My avg sale price per unit is the price I am charging for a ticket
$59.99. The avg variable cost is $27.49 based on dividing my total variable costs $10,996 by the
number of people attending, 400. So $10,996/400= $27.49. Please see table 2 for a detailed break
down. Therefore, I need to sell 154 tickets to breakeven. 4,972.72/ (59.99-27.49)= 153.006→
154 tickets to break-even. Since I need to sell 154 tickets, I need $9,238.46 in revenue to
breakeven (154x$59.99= $9,238.46).

4. I would use the Bethesda Round House Theatre as the venue for my jazz party because it
has a state of the art theater that seats up to 400 people (“Facility Use”, n.d., p. 1). It is also
located 1 block from the Bethesda Metro Station, and there are 2 large parking garages within 1
block as well making it convenient for people all over the D.C. metro area to come. According to
a study, higher education and income levels are strongly linked to those who listen to jazz; in
fact, “nearly half of those attending jazz performances, for example, are college graduates; over
three-quarters have had some college education. Those earning more than $50,000 a year are
more than twice as likely to attend performances as those earning less than $25,000” (DeVeaux,
1995, p. 3) According to the U.S. Census Bureau, Bethesda has a population of 60,858 where
98.2% of people age 25 and older have a high school degree or higher compared to 88.7% in the
state of Maryland (2015, p. 1). In addition, 82.4% of people age 25 and older in Bethesda have a
bachelor’s degree or higher compared to 36.8% in the state of Maryland (U.S. Census Bureau, p.

Anonymous 4

1). Also the per capita money income, also known as income per person, in Bethesda was
$85,442 compared to $36,354 in the state of Maryland (U.S. Census Bureau, p. 1). Therefore
because Bethesda is highly educated and has a greater income compared to the rest of Maryland,
this makes the Bethesda Round House Theatre a great venue for my jazz party.

5. Regarding the potential sales (revenue) for this party, I am limited to selling 400 tickets
because of the maximum capacity of the space I am renting. Therefore, my maximum revenue
would be $23,996 (400x$59.99=$23,996) which would exceed my break-even point. Please see
Table 3 below for more details. I believe selling 400 tickets is an attainable goal considering
“About one-third of American adults reported that they ‘liked jazz.’ In addition, ‘25 percent of
adult Americans expressed a desire to attend a jazz performance”’ (DeVeaux, 1995, p. 1). Using
the Build Up Approach, which is estimating “the number of potential buyers in a geographic
area,” (Weiser, 2015, slide #25) I would expect there to be 15,214 potential buyers in Bethesda
for my jazz party given that Bethesda has a population of 60,858 and that “25% of adult
Americans expressed a desire to attend a jazz performance” (DeVeaux, 1995, p. 1) (60,858x.25=
15,214) (U.S. Census Bureau, p. 1). Furthermore because the Bethesda Round House Theatre is
located 1 block from the Metro, people all over the Washington region could come to my party.
According to the Washington Post, the population of the Washington region is more than 5.8
million people (Mellnik & Morello, 2013, p. 1). Thus, I would estimate there to be 1.45 million
potential buyers in the Washington region for my jazz party given that the population is more
than 5.8 million and that “25% of adult Americans expressed a desire to attend a jazz
performance” (DeVeaux, 1995, p. 1) (5.8 million x.25= 1.45 million).

Table 3:

Price Each
Ticket

Number of
Tickets of Sold

Projected
Revenue

Potential Sales $59.99 400 23,996.00

6. Please see the income statement (Table 4) below.

Table 4:

Income Statement

Revenue/Sales $23,996.00

Cost of Goods Sold
(Total Variable
Expenses)

$10,996.00

Operating Expenses
(Total Fixed Costs)

$4,972.72

Profit $8,027.28

Anonymous 5

7. In sum, yes this jazz party should be thrown because the facility selected has an ideal
location with convenient parking and is in very close proximity to a Metro station. In addition,
the population of Bethesda is an ideal target market that has both a high income and is highly
educated both of which are strongly correlated with people who listen to jazz. Ultimately, we
should throw this jazz party because selling 400 tickets should be easy and with a profit of
$8,027.28, it is a no brainer!

References
Bethesda Blues & Jazz Supper Club. (n.d.). Music Calendar. Retrieved June 17, 2015, from

http://www.bethesdabluesjazz.com/events.cfm
Bethesda Blues & Jazz Supper Club. (n.d.). Dining. Retrieved June 17, 2015, from

http://www.bethesdabluesjazz.com/docs/2014_Dinner_Menu
Blues Alley. (n.d.). Events. Retrieved June 17, 2015, from http://www.bluesalley.com/events.cfm
Blues Alley. (n.d.). Menu. Retrieved June 17, 2015, from http://www.bluesalley.com/menu.cfm
Bohemian Caverns. (n.d.). Tickets. Retrieved June 17, 2015, from http://www.bohemiancaverns.com/tickets/
Bohemian Caverns. (n.d.). Meny. Retrieved June 17, 2015, from http://www.bohemiancaverns.com/menu/
DeVeaux, S. (1995). Jazz in America: Who’s Listening? [PDF]. Retrieved from

http://arts.gov/sites/default/files/NEA-Research-Report-31
Gist Family Catering. (n.d.). Lunch & Dinner Menu. Retrieved June 17, 2015, from

http://www.gistfamilycatering.com/ordereze/Pages/Menu.aspx?DeptID=4
Maryland DLLR. (2015, March). Minimum Wage and Overtime Law in Montgomery County [PDF]. Retrieved from

http://www.dllr.state.md.us/labor/wages/minimumwagelawmont
Mellnik, T., & Morello, C. (2013, March 14). D.C. Metro Area Population Growth Slows. The Washington Post.

Retrieved June 19, 2015, from http://www.washingtonpost.com/local/dc-metro-area-population-growth-
slows/2013/03/13/145ffc66-8c09-11e2-9f54-f3fdd70acad2_story.html

Montgomery County Police. (n.d.). Police Officer Requirements and Benefits. Retrieved June 17, 2015, from
http://www.mymcpnews.com/jobs/police-officer-requirements-and-benefits-hidden/

Round House Theatre. (n.d.). Facility Use. Retrieved June 17, 2015, from http://www.roundhousetheatre.org/meet-
us/facility-use/

Sam Hill Entertainment. (n.d.). FAQ- How to Book or Hire a Band, How Much Bands Cost and Prices, etc.
Retrieved June 17, 2015, from http://samhillbands.com/faq.shtm

Staples. (n.d.). Casio SE-S700 Cash Register. Retrieved June 17, 2015, from http://www.staples.com/Casio-SE-
S700-Cash-Register/product_311197

A Tasteful Affair. (n.d.). Catering FAQ’s. Retrieved June 17, 2015, from http://www.atasteful-
affair.com/resources/faqs.html

A to Z Party Rental. (n.d.). Chair Rental. Retrieved June 17, 2015, from
http://www.atozpartyrental.net/banquet_chair_rental.htm

A to Z Party Rental. (n.d.). Table Rental. Retrieved June 17, 2015, from
http://www.atozpartyrental.net/banquet_table_rental.htm

U.S. Census Bureau. (2015, May 29). Quickfacts: Bethesda, CDP, Maryland. Retrieved June 19, 2015, from
http://quickfacts.census.gov/qfd/states/24/2407125.html

Weiser, H. (2015, June 16). Financial Statements and Analysis [Prezi]. Retrieved from
https://prezi.com/qwfj0_v1i2i7/financial-statements-and-
analysis/?utm_campaign=share&utm_medium=copy

Introduction to Business Prof. Hannah Weiser

Let’s Throw a Business Party!
A case study to learn how to project sales, research and estimate expenses, and to calculate projected profit/loss.
This analysis will include the development of an income statement and students will conduct a break even analysis.

The project will require you to make a profitable party plan as a business
consultant, determining whether the party is financially viable. Please be
sure to review the assignment to determine the requirements. To
determine whether your idea for a party is practical, you will need to
research the costs of party finding costs in the industry and similar parties
and venues as a way of ‘benchmarking’. You will then need to think critically
to answer a series of financial questions in paragraph form (see below).

Remember
Breakeven?

For the purpose of conducting this analysis, research expenses for the party. You will need to
determine actual suppliers you can purchase from and actual estimated costs based on your research.

Remember to cite all sources in MLA format!

Steps to build the Income
Statement

Income Statement (also known as Profit/Loss Statement)

Step 1: Determine the Projected Revenue – (# of tickets sold for the party
multiplied by the price charged per ticket). You will need to review and utilize
one of the sales projection methods from the Prezi overview for Financial
Analysis.

Step 2: Determine the major expenses (list each type of expense and how
much you think it will be). Expenses should be listed as “Cost of Goods Sold” –
these are your variable expenses for the party that change based on the
number sold (e.g., food). Then, the remaining expenses should be listed as
“Operating Expenses” – these are your fixed expenses for the party that remain
the same no matter how many tickets you sell.

Step 3: Profit or Loss? Take your revenue and subtract all of the expenses. If
there is money left over, you have a profit. However, If you have no money
leftover, and you actually have more expenses than revenue, you are losing
money. You may need to consider either (1) raising the price charged per ticket,
or (2) lowering expenses.

You will need to determine how many
tickets you would need to sell at your
ticket price to breakeven. Remember,

the break even formula is:

# of tickets needed to break even=

fixed expenses
(price charging per ticket – variable
expenses, i.e., the cost per ticket )

Then, to determine the revenue

needed to breakeven, just multiply the
number of units necessary by the price

you are charging per ticket.

2

Introduction to Business Activity Prof. Hannah Weiser

Answer the questions below in paragraph format. In order to answer the questions below you will need to
conduct research and make assumptions. Please clearly indicate all assumptions you make throughout you
answers to each question and cite any resources used using footnotes. (Hint: The lecture material from our
financial analysis module and the 4ps of marketing module will be helpful in conducting this analysis). Make sure
to use PICK Analysis in preparing your submission! Your paper should be 2-3 pages long, single spaced.

1. Determine the sales price for a ticket to your party. How did you come to this price? Remember to use the

pricing strategies and objectives from the “pricing” section of our marketing overview, Ch. 13. You also will
want to “benchmark” against your competition: Who are three competitors and what are they charging? What
is your competitive advantage? Tip: Use pricing strategies and objectives from Learning Module 10 (pricing) in the text.

2. Identify, research, and estimate major expenses for your party to calculate what you expect the costs will be.
You should get creative here about what you need for your party (e.g., security, a band, food, etc.). Determine
whether the costs noted are fixed (operating expenses that do not change no matter how many tickets are
sold) or variable (costs of goods sold, which change based on the number of tickets sold). (e.g., Staples charges
$5 for a roll of tickets).

3. Using this proposed pricing structure and expenses for the first year, calculate the break even point – the
number of tickets you need to sell to break even and the revenue needed to break even. Use the breakeven
analysis information from the “pricing” section of our marketing overview,, and the activity available under the
corresponding learning module 10 to help you understand how to conduct this analysis.

4. Identify a city and venue for this party in the state of Maryland, supporting your choice using population data

(HINT: U.S. Census Bureau website) and additional information that supports your reasoning.

5. Based on your target market, and using sales projection methods from the financial analysis learning module

12 Prezi overview, project the potential sales (revenue) for this party. Will it exceed your break-even point?
Tip: Make sure to use a strategy from the prezi overview, such as the “build up” approach.

6. Using the revenue information collected and the expense estimates, prepare an income statement (i.e.,

profit/loss statement) to calculate the projected profit/losses in year one for this business. Tip: Learning
Module 12 can be used to help determine how to build an income statement.

7. Should we throw this party? Why or why not? Use the answers to the preceding questions to answer this

question, supporting your reasoning with the financial information collected.