Before becoming a publicly traded corporation, Groupon, Inc., relied on a financial metric it named "adjusted consolidated segment operating income" (ASCOI) to assess performance. ASCOI measured the company's operating income excluding several major expenses, including marketing and acquisition-related costs. One reason Groupon relied on ASCOI to assess performance may have been to:
A) Attract new subscribers to its service.
B) Strengthen its balance sheet.
C) Reduce its weighted average cost of capital.
D) Reduce congruence problems caused by applying traditional accounting measures in a new business environment.

Question

Quizplus · Accepted Answer

Groupon's use of ASCOI, which excluded significant expenses like marketing and acquisition costs, could help reduce congruence problems by providing a performance measure more aligned with the unique aspects of its new business environment, rather than relying solely on traditional accounting measures that might not fully capture the company's operational efficiency or growth potential.

Before Becoming a Publicly Traded Corporation, Groupon, Inc