Question: At the time of its initial public offering (initial sale of stock), Groupon, an Internet company that provides discount coupons, used unusual measures of its

At the time of its initial public offering (initial sale of stock), Groupon, an Internet company that provides discount coupons, used unusual measures of its business performance (Michael J. de la Merced, “Abracadabra! Magic Trumps Math at Web Start-Ups,” dealbook.nytimes.com, June 17, 2011). One such measure used by Groupon was acsoi (pronounced “ack-soy” or, alternatively, “ack-swa”) for “adjusted consolidated segment operating income.” Acsoi is operating profit before subtracting the year’s online marketing and acquisition expenses. The firm’s profit was negative, but its acsoi was positive. Groupon argued that acsoi marketing and acquisition expenses were an investment that would build future business and whose costs should therefore be amortized (spread out over time). If shareholders care about the stock price or the present value of the company, is acsoi an appropriate measure?

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