Ashley Palmer Clothing, Inc. Financial Forecasting CASE over the next three The firm was launched in June 2009 by Ashley Jantz and reaching S4.7 million in 2013. Du Amanda Palmer, both graduates of Boston College number of employees grew from 7 to l Ashley Palmer designs apparel for the modern woman's also moved into a 4,000-square-foot facility and shape rather than using the traditional standard sizing. ring this same time, the company added 6. The additional sewing equipment and presses History of Sizing Clothing In 1939, the National Bureau of Home Economics of the In August 2013, Ashley Palmer ventured into creating pro- U.S. Department of Agriculture was charged with stan fessional attire for young women. The products received dardizing sizing for women's clothing. Over a two-year rave reviews. Within three months, the retail outlets had period, some 15,000 women were given full-body mea- sold over 90 percent of their inventories, quickly placing surements. This system created the sizing system that is orders for more products still in use today Planning for Growth The founders, while excited about the prospect of Studies have found that the average body propor sales growth, began to worry. Based on their estimates, tions of American women when the sizing charts were the company would most probably experience a 50 percent created are different from the body proportions oftoday's growth rate, compared to the 25 percent they had expe over past two markedly more slender and shorter. The result is that it is were to avoid cash flow problems from the anticipated difficult for some women to find clothing that fits well. In growth, they needed to anticipate the asset requirements the September 2009 issue of Fashionista Magazine, Jantz, and additional financing that would be required to sus- who stands six feet tall, said, tain their business. The owners believed they would need to purchase WJe were tired of mot finding the clothes that were state-of-the-art industrial sewing machines, cutting the right fit so we decided it would be a good venture to create products for today's women based on busttables, and pressing machines at a cost of s280 measurement, cup size and torso length. based on bust new equipment would be depreciated over 14 years, using straight-line depreciation. Jantz also thought that the following assumptions were appropriate: 1. Cash, accounts receivable, and inventory would The Opportunity For Jantz and Palmer, this problem represented an oppor follow their same relationships to sales as in the past tunity. After considerable research, they decided to start a business that produced fitted clothing for today's young age asset-to-sales percentages experienced in 2012 women. They recruited a young up-and-coming fashion designer, Joy Lee, who had experience in apparel design 2. Both cost of goods sold and marketing expenses are for several major women's clothing brands. Seven months after starting the business, they offered their first dresses for sale online. two years; that is, each asset would maintain the aver- and 2013 variable and would approximate the same percenta sales as in 2012 and 2013. Then, in early 2010, the firm began supplying clothes 3. General and ad mtnistrative costs are fixed in nature but should increase to $130,000 in the next year to two well-known high-end retailers. Within a year after becoming a supplier to these exclusive retail outlets, the 4. The interest rates on the already outstanding debt company's production orders had more than doubled.would be renegotiated, which would reduce the inter In order to keep up, the firm added five more team mem- est on this debt to $45,000 5. The firm's tax rate should be about 40 percent. bers in October 2010
