New Heritage Doll Company: Capital Budgeting

Selected Operating Projections for Match My Doll Clothing Line Expansion
Exhibit 1
2010
Revenue

2011

2012

2013

2014

4,500

6,860

8,409

9,082

52.4%

22.6%

Revenue Growth

8.0%

Production Costs
Fixed Production Expense (excl depreciation)
Variable Production Costs
Depreciation
Total Production Costs

575

575

587

598

2,035

3,404

4,291

4,669

152

152

152

152

0

2,762

4,131

5,029

5,419

Selling, General & Administrative

1,250

1,155

1,735

2,102

2,270

Total Operating Expenses

1,250

3,917

5,866

7,132

7,690

583

994

1,277

1,392

Minimum Cash Balance as % of Sales

3.0%

3.0%

3.0%

3.0%

Days Sales Outstanding

59.2x

59.2x

59.2x

59.2x

7.7x

8.3x

12.7x

12.7x

30.8x

30.9x

31.0x

31.0x

952

152

152

334

Operating Profit

(1,250)

Working Capital Assumptions:

Inventory Turnover (prod. cost/ending inv.)
Days Payable Outstanding (based on tot. op. exp.)
Capital Expenditures

1,470

344 14.969 9.0% 8.853 6.648 2.603 8.0% 8.462 11.7x 12.2x 59.0x 31.7x 12.079 7.7x 31.860 3.411 8.0% 3.078 5.321 6.7x 12.373 7.521 6.203 1.0% 8.336 3.623 1.0x 31.593 11.2x 12.753 1.452 2.0% 3.0% 8.355 13.0% 610 622 635 648 660 674 5.440 12.600 2.0% 3.7x 12.2x 59.687 10.2x 59.503 1.7x 12.0% 3.Expansion 2015 2016 2017 2018 2019 2020 9.2x 59.963 8.2x 59.0x 31.827 7.0x 31.045 2.089 3.000 6.0x 31.299 12.209 3.0% 8.0% 59.808 10.305 8.0% 3.685 164 178 192 207 224 242 5.0x 361 389 421 454 491 530 .893 2.519 7.

General & Administrative 1.201 0 1.922 4.201) 0 550 1.724 Operating Profit Working Capital Assumptions: Minimum Cash Balance as % of Sales 3.0% Days Sales Outstanding 59.044 Total Operating Expenses 1. exp.201 0 5.7x 33.650 1.8x 33.) 12.454 Selling.) 33.683 1. cost/ending inv.717 Variable Production Costs 0 2.498 (1.651 11.240 2.360 20.0% 3.2x 59.2x 59.450 12.New Heritage Doll Company: Capital Budgeting Selected Operating Projections for Design Your Own Doll Exhibit 2 2010 Revenue 2011 2012 2013 2014 0 6.8% Production Costs Fixed Production Expense (excl depreciation) 0 1.210 9.6x Days Payable Outstanding (based on tot.250 7.2x 12.610 0 2.000 14.9x 310 310 Capital Expenditures 4.222 Revenue Growth 139.3x 12.794 2.2x Inventory Turnover (prod.3% 40.566 17.427 Depreciation 0 310 310 310 Total Production Costs 0 4.644 13. op.192 .0% 3.

817 5.833 14.7x 12.0% 3.962 22.0% 3.7x 12.123 3.9x 826 875 928 983 1.509 3.719 3.0% 3.369 15.310 3.287 4.105 .0% 3.712 436 462 490 520 551 584 14.0% 1.9x 33.9x 33.0% 3.9x 33.786 1.2x 59.737 18.656 19.933 12.0% 6.2x 59.2x 12.9x 33.106 5.736 15.061 28.0% 6.858 1.7x 12.2x 59.435 22.113 18.412 5.2x 59.7x 12.694 16.685 6.2x 59.553 24.0% 6.231 16.140 19.966 2.182 12.7x 33.0% 59.529 27.721 24.043 1.751 1.0% 6.946 3.084 25.775 20.219 23.7x 12.895 1.822 1.0% 6.229 4.145 17.544 4.9x 33.779 2.983 13.2015 2016 2017 2018 2019 2020 21.