ALMA.com is an e-commerce service for teenagers’ video games, television programs, and other
material, intended to be both educational and enjoyable. Valuable product information and detailed
review comments are combined with awide selection of productsfor purchase to help familiesmake their
children’s educational and entertainment decisions. A team of leading educators and experts provide
reviews and comments on the products sold by the firm. ALMA.comtargets highly educated, convenienceoriented, and value-conscious families with children under the age of fifteen, estimated to be about 40
percent of Internet users. The firmis using awarehouse distribution model and channels that stems higher
net margins, as well as greater selection and convenience for customers, when compared to traditional
retailers and competitors.
Venture capital of $1.15M was obtained to start up operations in 2021; a second round of
venture financing of $0.15M (capital lease of warehouse facilities) helped ALMA.com to move through
its survivalstage. The annual interestrate on capital lease is 4%.
Because of relatively high marketing expenditures aimed at gaining market share, the firm is
expected to suffer net losses for the first two years 2021 and 2022. However, net profit margins are
expected to average 15% per yearbeginningin Year 2023.
The management team is headed by Ms. Alma Serah, who serves as the president of the venture
and controls about 40% ofthe ownership ofthe firm. Ms. Serah has more than twenty years of experience
in high-tech industries, including previous positions with prestigious corporations such as Microsoft. She
holds a Bachelor Degree in Electrical Engineering and a Master Degree in Computer Engineering from top
educational institutionsin the world.NelmaBradman, directorof technology, has more than twelve years
of experience in software development and integration. Dalma Loman has almost ten years of experience
in business development and sales in the software industry. Salma Norman, director of marketing, was
responsible for the marketing communications function and the Internet operations of a large software
company for nine years. Management strives for continual improvement in ease of user interface,
personalized services,and amount of information supplied to customers.
ALMA.com balance sheet as ofthe end of 2021 is expected to be as follows:
ALMA.com
Balance Sheetas of December31, 2021 (InMillions)
Cash 0.25 Accounts payable 0.20
Accounts receivable 0.50 Capital Lease Liability* 0.15
Inventories 0.60 Total Liabilities 0.35
Net fixed assets* 0.15 Equity (Venture Capital) 1.15
Total assets $1.50 Total Liabilities and Equity $1.50
*Represents the capital lease oftools and equipment (warehouse facilities)
After discussions with the company’s marketing manager and finance manager, sales over each
quarter of 2022 are forecasted to be:
Quarter Sales Forecast (InMillions)
Q1 $ 0.65
Q2 $ 0.75
Q3 $ 0.85
Q4 $ 1.00
Total $ 3.25