Final Project: Annies on Broadway

Overview
Final project will be a scenario-based study of Annies on Broadway, a retail boutique, which is
owned and operated on a sole-proprietorship mode. This retail boutique will be used as a model
to gain practical understanding of the retail math concepts learned in the online lecture.
Each week, starting Week 1 and concluding Week 6, the studentswill be introduced to new
dimensions of the scenario this will guide students to real-life problems faced by business
professionals. Students will create and utilize skeletal profit and loss statements covering a one
year business cycle at Annies on Broadway, which will enable them to create a comprehensive
profitability study of the retail boutique. Each week , students will create a quarterly skeletal profit
and loss statement and perform quarter-relevant tasks, such as explaining how net profit has
been influenced by the various parameters mentioned in the scenario, analyzing what could have
been done to offset losses in profit, identifying areas where the loss might occur, and suggesting
plan of action to improve profits.
Wrap-up activity for the final project will reflect a one-year quarter-by-quarter analysis of the fiscal
year (2005) at Annies on Broadway. This analysis will be done as a compare and contrast
study against the first year of business (2004). Each skeletal profit and loss statement will be
presented in dollars and percentages and students will be asked to create a trend and profit
analysis of the year 2005, which will include suggested strategies for maintaining profitability over
the next year of operations.
Students will also complete a year-end profit performance analysis of Annies on Broadway
detailing trend analysis in key profit and loss performance areas: net sales, gross margin,
operating expenses, net profit or loss, and average markup attained for the entire fiscal year
ending December 31, 2005. This report will also include a written analysis pointing out strategies
the owner should continue/discontinue/augment/adopt to be more profitable in the year to come.
Students will base these decisions on the financial data generated for the retail boutique during
the 2005 business cycle.

FRM130_Retail Math
Final Project
2006 The Art Institute of Pittsburgh - Online Division

Scenario
On January 1, 2005, Annie Franklin opened the doors of her newly relocated boutique Annies
on Broadway in the downtown Westlake Center shopping district mall in Seattle. Annies on
Broadway is a retail boutique stocking womens fashions in Moderate to Bridge price range. Prior
to this move, Annie rented a small retail space in downtown Redmond, WA. This is her second
year of operation, with her first year efforts yielding 4 percent net profit on total sales of $497,000,
based on markup of 62.4 percent. These financial statistics were good enough to apply for and
receive a loan from the Small Business Association (SBA). With the SBA loan and her personal
savings from 15 years of working as a buyer for Nordstrom, Annie was capable of raising the
requisite capital to acquire a prime location on the fourth floor, among other non-competing
clothing and womens accessory boutiques in the mall. Annie opened her business with three
employees, not including her; she has opted not to take salary for first three years. One of the fulltime employees was salaried at $36,000 yearly, and the other two part -time employees were paid
$10.00 per hour and were employed 30 hours per week. All salaries are net figures.
The following figures apply to first quarter of Annies on Broadway operations ending March 31,
2005. (Note: All figures given are three-month totals unless noted otherwise.)
$
Gross sales

185,500.00

Customer returns and allowances

8,000.00

Billed COGS

71,500.00

Inbound freight

700.00

Cash discounts taken

2%

Rent

45,000.00

Advertising

6,000.00

Wages (13 weeks)

19,400.00

General overhead (utilities, office supplies)

10,500.00

Insurance

18,600.00

Weekly sales meeting refreshments (13 weeks total)

1000.00

Maintenance service

2,800.00

Security guard service (not supplied by mall)

4,000.00

FRM130_Retail Math
Final Project
2006 The Art Institute of Pittsburgh - Online Division