Determine the market feasibility of achieving its break-even

Reference no: EM133740213

Case: 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.

Question: Recognize the PPMC projections and the data associated with it in the presented case

Case Background
Purchase Point Media Corporation (Pink Sheets: PPMC) is what some refer to as a thinly traded "corporate shell." The firm held patents in the United States, Canada, United Kingdom, and Germany for a shopping-cart display device, but was a nonreporting and nonoperating entity.
On March 18, 2014, 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, 2015, PPMC again announced its intention to sell the firm's intangible assets (Business Wire 2003).
In the second announcement, PPMC management referred interested investors to their corporate website. Among the data provided, PPMC included a financial projection and other items they felt might be of 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.

Reference no: EM133740213

Questions Cloud

Discuss why you would consider implementing recommendations : Discuss why you would or wouldn't consider implementing the recommendations from this article into practice.

What types of conflict have you experienced while working : What types of conflict have you experienced while working on teams, and how did/would you handle the conflict? Is conflict always negative? Provide an example

What is the culture of philanthropy : What is the "culture" of philanthropy in an era of weak government regulation-tax breaks on billionaires? How does that affect our field, and everything else?

Briefly identify the organizational problem : Briefly identify the organizational problem. What method(s) would you use to collect data. Explain your choices

Determine the market feasibility of achieving its break-even : Recognize the PPMC projections and the data associated with it in the presented case and determine the market feasibility of achieving its break-even point

What is the most likely diagnosis for chronic cough : A 55-year-old man with a history of smoking and chronic cough presents with a new hoarseness of voice. What is the most likely diagnosis?

What is the most likely diagnosis for slurred speech : A 72-year-old male presents with a sudden onset of right-sided weakness and slurred speech. CT scan of the head shows. What is the most likely diagnosis?

Pros and cons of having a national police force : The pros and cons of having a national police force. Would officers have better training and equipment?

What is the most likely cause : A 38-year-old male with no past medical history presents with sudden onset of sharp chest pain and shortness of breath. What is the most likely cause?

User Account

All Pages