Year 5 5 12/30/2012 4,132,517 1,303,416 2.820 101 2.449,200 6 12/2019 3603,750 9,023438 270/0.33 4,088,37% 1600125 22:55 L082 31 0 7 6 0 379,900 41.800 Historical Projected 2 12/30/2013 12/30/2014 12/30/2015 12/30/2016 12/30/2017 12/30/2018 7,491,187 11,000,000 13.200.000 18,480,000 23,100,000 28.125.000 1,62,722 2,397 476 3,300,000 4,620,000 3,725.00 2218.750 5858465 6002.524 0.000.000 13.800.000 17,505.000 216250 4,342,500 4,299,025 4.256.084 0213523 1,121,388 4,129,674 0 11000 13200 18480 23100 28875 1515065 4292449 5.800 9.92 13.130512 17,422,201 149.00 837,HO RR1,958 228,376 97.238 1,028,672 0 0 0 0 a 1958 3,45459 74,758 0609 620 12 153274 10.400.029 178,435.30 1,200,106,22 1,662,06537 3044,867. 4,253,645.34 5260160.C 888.623 2.245403 2006.090 5 65413 ZAZE 50.704569 0 0 0 O 149,007 8.37.860 881.958 928,376 9212 1,028,672 0 1000000 55440 69200 16625 10828125 271,200.00 68000.00 42635,50 103325.20 895 M 55 111918 19 1,108,729.70 2. 151,342.65 3.955 45.88 6,616 154.72 8.829.275,64 11.712256 33,490,82725 2.151.342.65 3,537.005.25 5 274, OS 5.329.408 90 7.459. IAR 53 0 0 Sales Cost Of Goods Gross Profit SG&A RBD Ep EBITDA Deprciation Amortization EBIT Tax 35% After Tax ET Additional to Intangible Deprciation Amortization Capital Expdinture Change in Working C FOR PEOF 10 11 12 13 14 15 16 17 330,101 113,335 35 219,0 2.6527.0.0.0 12101 0 1.093,113 0 D 0 43.800 0 10,800.00 272 365.65 HET WWW'EESI ENTRES 19 20 21 22 Assumptions Forecast the financial statements for the years 2014 till 2019, taking into consideration the assumptions given in the case: . Annual sales growth would be 20% for 2015, 40% in 2016 (since the World Trade Center location would potentially be opening in late 2015), and 25% for the three years afterward. They assumed an annual sales growth rate of 4% in perpetuity Cost of goods sold had consistently been approximately 25% of sales but had been dipping in the past two years. They expected it to remain approximately constant over the next five years. With rent and labor costs making up a large portion of their expenses, Romaniszyn and Tom expected SG&A costs to remain approximately the same as prior years, but to decrease by one percentage point each year. Although R&D costs had been negligible in the past, they decided they should probably assume some cost in the future as well, albeit only 0.1% of sales. With the prospect of opening a new store in the following year, the two decided to allocate $1,000,000 for capital expenditures in 2015. After that, however, they assumed that no new stores would be opened and capital . however, they assumed that no new stores would be opened and capital expenditures would remain approximately 0.3% of sales. Depreciation was expected to rise by five percentage points cach year starting in 2014, becoming 100% of capital expenditures in 2019. Additions to intangibles would be zero. Amortization would be zero. The tax rate would continue to be 35%. . The two expected the change in working capital to remain a constant percent of the change in sales and behave similarly to 2014. I . 3 L K M N H X + weighted average cost of capital was 12%. They chose a 12x EBITDA multiple. Question: 1- How to calculate Horizon value? 2- How to calculate Opertion value? B I U ab 5
