new heritage doll company
LINE EXTENSION
| Selected Operating Projections for Design Your Own Doll ($ in thousands) | |||||||||||
| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |
| Revenue | $4,500 | $6,860 | $8,409 | $9,082 | $9,808 | $10,593 | $11,440 | $12,355 | $13,344 | $14,411 | |
| Revenue Growth | 52.4% | 22.6% | 8.0% | 8.0% | 8.0% | 8.0% | 8.0% | 8.0% | 8.0% | ||
| Production Costs | |||||||||||
| Fixed Production Expense (exlc. Depreciation) Buzzell, Zuzana: Buzzell, Zuzana: Given | 575 | 575 | 587 | 598 | 610 | 622 | 635 | 648 | 660 | 674 | |
| Variable Production Costs Buzzell, Zuzana: Buzzell, Zuzana: Given | 2,035 | 3,404 | 4,291 | 4,669 | 5,078 | 5,521 | 6,000 | 6,519 | 7,079 | 7,685 | |
| Depreciation Buzzell, Zuzana: Buzzell, Zuzana: Given | 152 | 152 | 152 | 152 | 164 | 178 | 192 | 207 | 224 | 242 | |
| Total Production Costs Buzzell, Zuzana: Buzzell, Zuzana: Fixed Prod Exp+Variable Prod Cost+Depreciaton | 2,762 | 4,131 | 5,030 | 5,419 | 5,852 | 6,321 | 6,827 | 7,374 | 7,963 | 8,601 | |
| Selling, General, & Administrative Buzzell, Zuzana: Buzzell, Zuzana: Given | 1,250 | 1,155 | 1,735 | 2,102 | 2,270 | 2,452 | 2,648 | 2,860 | 3,089 | 3,336 | 3,603 |
| Total Operating Expense Buzzell, Zuzana: Buzzell, Zuzana: Total Production Cost + Total Operating Expense | $1,250 | $3,917 | $5,866 | $7,132 | $7,689 | $8,304 | $8,969 | $9,687 | $10,463 | $11,299 | $12,204 |
| Operating Profit Buzzell, Zuzana: Buzzell, Zuzana: Given | ($1,250) | $583 | $994 | $1,277 | $1,393 | $1,504 | $1,624 | $1,753 | $1,892 | $2,045 | $2,207 |
| Operating Profit/Sales | 0.130 | 0.145 | 0.152 | 0.153 | 0.153 | 0.153 | 0.153 | 0.153 | 0.153 | 0.153 | |
| SG&A/Sales | 0.257 | 0.253 | 0.250 | 0.250 | 0.250 | 0.250 | 0.250 | 0.250 | 0.250 | 0.250 | |
| Working Capital Assumptions: | |||||||||||
| Minimum Cash Balance as % of Sales Buzzell, Zuzana: Buzzell, Zuzana: Given | NA | NA | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% |
| Days Sales Outstanding Buzzell, Zuzana: Buzzell, Zuzana: Given | NA | NA | 59.2x | 59.2x | 59.2x | 59.2x | 59.2x | 59.2x | 59.2x | 59.2x | 59.2x |
| Inventory Turnover (prod. Cost/ending inv.) Buzzell, Zuzana: Buzzell, Zuzana: Given | NA | NA | 12.2x | 12.3x | 12.6x | 12.7x | 12.7x | 12.7x | 12.7x | 12.7x | 12.7x |
| Days Payable Outstanding (based on tot. op. exp.) Buzzell, Zuzana: Buzzell, Zuzana: Given | NA | NA | 33.7x | 33.8x | 33.9x | 33.9x | 33.9x | 33.9x | 33.9x | 33.9x | 33.9x |
| Capital Expenditure Buzzell, Zuzana: Buzzell, Zuzana: Given | $1,470 | $952 | $152 | $152 | $334 | $361 | $389 | $421 | $454 | $491 | $530 |
| Growth in Capex | -35.24% | -84.03% | 0.00% | 119.74% | 8.08% | 7.76% | 8.23% | 7.84% | 8.15% | 7.94% | |
| MILESTONE #1 (hint: start by calculating Net Working Capital) | |||||||||||
| Step 1: Net Working Capital | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
| Cash Buzzell, Zuzana: Buzzell, Zuzana: Given | 135 | 206 | 252 | 272 | 294 | 318 | 343 | 371 | 400 | 432 | |
| Accounts Receivable Buzzell, Zuzana: Buzzell, Zuzana: Given | 729 | 1,112 | 1,363 | 1,472 | 1,590 | 1,717 | 1,855 | 2,003 | 2,163 | 2,336 | |
| Inventory Buzzell, Zuzana: Buzzell, Zuzana: Given | 360 | 500 | 396 | 427 | 461 | 498 | 538 | 581 | 627 | 677 | |
| Accounts Payable Buzzell, Zuzana: Buzzell, Zuzana: Given | 317 | 484 | 593 | 640 | 692 | 747 | 807 | 871 | 941 | 1,016 | |
| Net working Capital Buzzell, Zuzana: Buzzell, Zuzana: Net Working Capital = Cash+AR+Inv-AP | 800 | 907 | 1,334 | 1,418 | 1,531 | 1,653 | 1,786 | 1,929 | 2,084 | 2,249 | 2,429 |
| ΔNWC | 107 | 427 | 84 | 113 | 122 | 133 | 143 | 155 | 165 | 180 | |
| NWC/Sales | 0.202 | 0.194 | 0.169 | 0.169 | 0.169 | 0.169 | 0.169 | 0.169 | 0.169 | 0.169 | |
| Step 2: NPV and IRR | |||||||||||
| NPV Analysis | |||||||||||
| Free Cash Flows | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
| EBIT (1-t) Buzzell, Zuzana: Buzzell, Zuzana: We assume Tax Rate of 40% |
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| plus depreciation | |||||||||||
| less ΔNWC | (107) | (427) | (84) | (113) | (122) | (133) | (143) | (155) | (165) | (180) | |
| less capital expenditures | |||||||||||
| Free Cash Flows Buzzell, Zuzana: Buzzell, Zuzana: FCF= EBIT(1-t)+ depreciation + (lessΔNWC)+(less capital expenditure) |
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| Terminal Value 3.00% Buzzell, Zuzana: Buzzell, Zuzana: TV = [FCF(2020)*(1+TV rate)]/(discount factor+TV rate) | 0 | ||||||||||
| Intial Outlays | |||||||||||
| Net Working Capital Buzzell, Zuzana: Buzzell, Zuzana: Given | (800) | ||||||||||
| Net Property, plant & equipment Buzzell, Zuzana: Buzzell, Zuzana: Given | (1,470) | ||||||||||
| Discount Factor 8.40% Buzzell, Zuzana: Buzzell, Zuzana: Discount Factor = (1/1+r)T | 1.0000 | ||||||||||
| Present Value with TV in 2020 Buzzell, Zuzana: Buzzell, Zuzana: PV=FCF*Discount Factor | (2,270) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Present Value without TV in 2020 | (2,270) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Net Present Value | ($2,270) | ||||||||||
| NPV without Terminal Value | ($2,270) | ||||||||||
| IRR analysis | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
| Cash Flows | (2,270) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| IRR | ERROR:#NUM! | ||||||||||
| MILESTONE #2 | |||||||||||
| Payback Analysis | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
| Cash Flows (including TV) Buzzell, Zuzana: Buzzell, Zuzana: Using the same cash flow s for IRS analysis | (2,270) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Cumulative Cash Flows | (2,270) | (2,270) | (2,270) | (2,270) | (2,270) | (2,270) | (2,270) | (2,270) | (2,270) | (2,270) | (2,270) |
| Payback Period (in years) | Result in Years | ||||||||||
| 5-year Cumulative EBITDA | Calc Here | ||||||||||
| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |
| Discounted Cash Flows (including TV) Buzzell, Zuzana: Buzzell, Zuzana: This was calculated as part of the NPV analysis | (2,270) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Cumulative Discounted Cash Flows | (2,270) | (2,270) | (2,270) | (2,270) | (2,270) | (2,270) | (2,270) | (2,270) | (2,270) | (2,270) | (2,270) |
| Payback Period (in years) | Result in Years | ||||||||||
| MILESTONE #3 | |||||||||||
| Profitability Index | |||||||||||
| NPV/Initial Investment | Calc Here |
OWN DOLL
| Selected Operating Projections for Design Your Own Doll ($ in thousands) | |||||||||||
| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |
| Revenue | $0 | $6,000 | $14,360 | $20,222 | $21,435 | $22,721 | $24,084 | $25,529 | $27,061 | $28,685 | |
| Revenue Growth | 139.3% | 40.8% | 6.0% | 6.0% | 6.0% | 6.0% | 6.0% | 6.0% | |||
| Production Costs | |||||||||||
| Fixed Production Expense (exlc. Depreciation) Buzzell, Zuzana: Buzzell, Zuzana: Given | 0 | 1,650 | 1,683 | 1,717 | 1,751 | 1,786 | 1,822 | 1,858 | 1,895 | 1,933 | |
| Additional development costs (IT) Buzzell, Zuzana: Buzzell, Zuzana: Table #4 in the case study | 435 | ||||||||||
| Variable Production Costs Buzzell, Zuzana: Buzzell, Zuzana: Given | 0 | 2,250 | 7,651 | 11,427 | 12,182 | 12,983 | 13,833 | 14,736 | 15,694 | 16,712 | |
| Depreciation Buzzell, Zuzana: Buzzell, Zuzana: Given | 0 | 310 | 310 | 310 | 436 | 462 | 490 | 520 | 551 | 584 | |
| Total Production Costs Buzzell, Zuzana: Buzzell, Zuzana: Fixed Prod Exp+Variable Prod Cost+Depreciaton | 435 | 4,210 | 9,644 | 13,454 | 14,369 | 15,231 | 16,145 | 17,114 | 18,140 | 19,229 | |
| Selling, General, & Administrative Buzzell, Zuzana: Buzzell, Zuzana: Given | 1,201 | 0 | 1,240 | 2,922 | 4,044 | 4,287 | 4,544 | 4,817 | 5,106 | 5,412 | 5,737 |
| Total Operating Expense Buzzell, Zuzana: Buzzell, Zuzana: Total Production Cost + Total Operating Expense | $1,201 | $435 | $5,450 | $12,566 | $17,498 | $18,656 | $19,775 | $20,962 | $22,220 | $23,552 | $24,966 |
| Operating Profit Buzzell, Zuzana: Buzzell, Zuzana: Given | ($1,201) | ($435) | $550 | $1,794 | $2,724 | $2,779 | $2,946 | $3,122 | $3,309 | $3,509 | $3,719 |
| Operating Profit/Sales | 0.092 | 0.125 | 0.135 | 0.130 | 0.130 | 0.130 | 0.130 | 0.130 | 0.130 | ||
| SG&A/Sales | 0.207 | 0.203 | 0.200 | 0.200 | 0.200 | 0.200 | 0.200 | 0.200 | 0.200 | ||
| Working Capital Assumptions: | |||||||||||
| Minimum Cash Balance as % of Sales Buzzell, Zuzana: Buzzell, Zuzana: Given | NA | NA | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% |
| Days Sales Outstanding Buzzell, Zuzana: Buzzell, Zuzana: Given | NA | NA | 59.2x | 59.2x | 59.2x | 59.2x | 59.2x | 59.2x | 59.2x | 59.2x | 59.2x |
| Inventory Turnover (prod. Cost/ending inv.) Buzzell, Zuzana: Buzzell, Zuzana: Given | NA | NA | 12.2x | 12.3x | 12.6x | 12.7x | 12.7x | 12.7x | 12.7x | 12.7x | 12.7x |
| Days Payable Outstanding (based on tot. op. exp.) Buzzell, Zuzana: Buzzell, Zuzana: Given | NA | NA | 33.7x | 33.8x | 33.9x | 33.9x | 33.9x | 33.9x | 33.9x | 33.9x | 33.9x |
| Capital Expenditure | $4,610 | $0 | $310 | $310 | $2,192 | $826 | $875 | $928 | $983 | $1,043 | $1,105 |
| Growth in Capex | 0.00% | 607.10% | -62.32% | 5.93% | 6.06% | 5.93% | 6.10% | 5.94% | |||
| MILESTONE #1 (hint: start by calculating Net Working Capital) | |||||||||||
| Step 1: Net Working Capital | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
| Cash Buzzell, Zuzana: Buzzell, Zuzana: Given | 0 | 180 | 431 | 607 | 643 | 682 | 723 | 766 | 812 | 861 | |
| Accounts Receivable Buzzell, Zuzana: Buzzell, Zuzana: Given | 973 | 2,328 | 3,278 | 3,475 | 3,683 | 3,904 | 4,139 | 4,387 | 4,650 | ||
| Inventory Buzzell, Zuzana: Buzzell, Zuzana: Given | 346 | 786 | 1,065 | 1,130 | 1,197 | 1,269 | 1,345 | 1,426 | 1,512 | ||
| Accounts Payable Buzzell, Zuzana: Buzzell, Zuzana: Given | 474 | 1,135 | 1,598 | 1,694 | 1,796 | 1,904 | 2,018 | 2,139 | 2,267 | ||
| Net working Capital Buzzell, Zuzana: Buzzell, Zuzana: Net Working Capital = Cash+AR+Inv-AP | 1,000 | 1,025 | 2,410 | 3,352 | 3,554 | 3,766 | 3,992 | 4,232 | 4,486 | 4,756 | |
| ΔNWC | 1,000 | 25 | 1,385 | 942 | 202 | 212 | 226 | 240 | 254 | 270 | |
| NWC/Sales | 0.171 | 0.168 | 0.166 | 0.166 | 0.166 | 0.166 | 0.166 | 0.166 | 0.166 | ||
| Step 2: NPV and IRR | |||||||||||
| NPV Analysis | |||||||||||
| Free Cash Flows | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
| EBIT (1-t) Buzzell, Zuzana: Buzzell, Zuzana: We assume Tax Rate of 40% |
|||||||||||
| plus depreciation | |||||||||||
| less ΔNWC | |||||||||||
| less capital expenditures | |||||||||||
| Free Cash Flows Buzzell, Zuzana: Buzzell, Zuzana: FCF= EBIT(1-t)+ depreciation + (lessΔNWC)+(less capital expenditure) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Terminal Value 3.00% Buzzell, Zuzana: Buzzell, Zuzana: TV = [FCF(2020)*(1+TV rate)]/(discount factor+TV rate) | 0 | ||||||||||
| Discount Factor 9.00% Buzzell, Zuzana: Buzzell, Zuzana: Discount Factor = (1/1+r)T | 1.0000 | ||||||||||
| Present Value with TV in 2020 Buzzell, Zuzana: Buzzell, Zuzana: PV=FCF*Discount Factor | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Present Value without TV in 2020 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Net Present Value | $0 | ||||||||||
| NPV without Terminal Value | $0 | ||||||||||
| IRR analysis | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
| Cash Flows | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| IRR | ERROR:#NUM! | ||||||||||
| MILESTONE #2 | |||||||||||
| Payback Analysis | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
| Cash Flows (including TV) Buzzell, Zuzana: Buzzell, Zuzana: Using the same cash flow s for IRS analysis | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Cumulative Cash Flows | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Payback Period (in years) | Result in Years | ||||||||||
| 5-year Cumulative EBITDA | Calc Here | ||||||||||
| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |
| Discounted Cash Flows (including TV) Buzzell, Zuzana: Buzzell, Zuzana: This was calculated as part of the NPV analysis | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Cumulative Discounted Cash Flows | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Payback Period (in years) | Result in Years | ||||||||||
| MILESTONE #3 | |||||||||||
| Profitability Index | |||||||||||
| NPV/Initial Investment | Calc Here |