Frankly, it is somewhat scary to me that I am finding an article like this one, not only important, but very interesting... It also happens to tie up themes in this Digital Marketing class with my other Financial Planning and Analysis class, so my whole academic world is circling right on this very post!!!!
Here is the article: (the link may have expired but just search "Groupon's Accounting" within WSJ site ) http://online.wsj.com/article/SB10001424053111903635604576472531846174782.html?KEYWORDS=groupon
The breakdown of the article is that in the preparation for Groupon's IPO, its financials are compiled and disseminated - like every company. BUT unlike most companies that are IPO'ing soon, they have super high valuations with very little profit to show (if any at all).
Therefore Groupon uses "creative accounting" to create a metric called "Consolidated Segment Operating Income", which in other industry leaders' eyes amounts to Profit before Expenses.
We learned in our Marketing class discussions that Groupon has yet to turn a profit, still very high in costs due to the model needing high personnel costs, but they have to "window dress" somehow...
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