Techmall.Com's Revenues

1. What are the revenue streams for TechMall?

The revenues streams for TechMall include the following:

a. Setup Fee Revenue

b. Statement Fee Revenue

c. Transaction Fee Revenue

2. What drives each of the revenue streams?

a. Merchant setups drives the Setup Fee Revenue (Setup Fee Revenue=Merchant setups*$750);

b. System merchants drives the Statement Fee Revenue (Statement Fee Revenue=System Merchants*$50);

c. Total transactions, and Transaction Dollars drives the Transaction Fee Revenue (Transaction Fee Revenue=2%*Transaction Dollars (when the amount< $10000)*Total Transactions) + (Transaction Fee Revenue =Total Transaction (when the amount>$10000)* $200)

3. Is TechMall getting their expected revenue from each of the revenues streams? Get specific with the amounts from each type of revenue.

No, it is not. The TechMall is having approximately 30% of its total revenues as it’s A/R. To be specific, take year 4 as an example:

a. Setup Fee Revenue: In year 4, there are total 4883 Merchants (Exhibit 5), TechMall should expect $750*4883=$3,662,250 as its Setup Revenue. However, it shows only $2,831,109 in its year 4 income statement. Apparently, the A/R for Setup Fee Revenue is $831,141 and its 29.4% of the total Setup Fee Revenue.

b. Statement Fee Revenue: Despite a huge number of non-system merchants, the A/R for system merchants is a large amount. In year 4, there are total 9125 system merchants, TechMall is supposed to collect $4,488,700 (the sum of system merchants from Dec of year 3 till Nov. of year 4*$50) as its Statement Fee Revenue. However, it shows $2,535,594 difference between its actual Statement Fee Revenue. The A/R is as big as 43.5%.

c. Transaction Fee Revenue: Since we don’t have