Overview
Rent the Runway (RTR)
Briefly answer each of the following questions in a sentence or two. Submit your answers over Zoom before class on Thursday 11/14 What is the RTR business model? Give one reason why the CEO and other executives of a company care should care about stock performance (i.e. whether the company’s stock trades up or down)? How much money did RTR raise in the IPO? How many shares? What was the IPO price per share? What was the price at the end of the first day of trading? What is the purpose or benefit of an IPO to any company (not just RTR)? How did RTR’s IPO change its capital structure? Your answer should use the words equity and debt. Did RTR have other alternatives for repaying debt? When was the debt’s maturity? How was debt limiting this unprofitable company’s ability to grow? Was the IPO timing right in RTR’s lifecycle? What’s one argument (related to financial statements) that IPO was too early? What’s one argument (related to financial statements) that IPO was too late? Did the IPO help with RTR marketing its service? What’s organic marketing? A good answer will indicate you know RTR’s target customer? RTR was successful in finding lots of customers, but it never became GAAP profitable. Assuming RTR was on the road to GAAP profitability before COVID pandemic, do you think it would have hit cash flow positive before or after GAAP profitability? Why? Should an investor ignore non-cash expense associated depreciation of dresses and other attire? Why? What was the average number of turns per dress over its lifetime? What does that mean in plain English as you would explain it to someone who knows nothing about accounting? Does this average number of turns conflict with straight line depreciation over a three year life? In the beginning, RTR outsourced distribution, logistics, and cleaning. Then, it build two fulfillment centers (New Jersey and Texas). What is one strength and one weakness of outsourcing vs. in-house? What’s the average price of a rental? What’s the average cost of fulfillment? What’s the average depreciation expense per dress per rental?
(Attached below is the reading)