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PaneraBreadCaseQuestions.docx

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Panera Bread Company Case Questions

1) Complete the financing portion of Panera Bread Company’s 2007 forecast financial statements, and provide a forecast for the next five years. A worksheet is provided for this purpose. As an initial (base case) analysis, assume all borrowings are some form of debt. You may assume the repurchase option occurs in 2008 and that the interest rate on outstanding long-term debt is 6%. Assume sales growth of 25% for 2008 and 2009 and 5% thereafter.

2) Given the need for additional capital, should the company use short-term or long-term debt? Make sure you contrast the desirability of long-term debt versus a short-term line of credit.

3) Calculate and utilize appropriate key financial ratios, including the following:

· DuPont Identity with each of its components

· ROA and ROE

· IGR and SGR

· Times Interest Earned

· Any other ratios you deem to be useful

4) If you were a financial institution, would you loan money to provide Panera with the additional debt they need? Why or why not? If banks are willing to loan up to 3 times a company’s prior year EBITDA, how much in loans could Panera potentially receive?