NAME Hammad Ali

SAP 70075206
Subject Financial Management
Section D
Teacher name Gul Rukh
Exhibit 10: Forecasting Parameters
1 2 3 4 5 6 7
Sales growth 70.2% 33.5% 22.9% 9.7% 1.5% 0.3%
CGS (% sales) 70.9% 63.7% 56.2% 39.9% 39.9% 39.9% 39.9%
SGA (% sales, excluding dep & advertising) 19.3% 18.3% 17.3% 13.6% 13.6% 13.6% 13.6%
Advertising (% sales) 10.6% 8.9% 8.2% 7.2% 7.2% 7.2% 7.2%
Accounts Receivable (% sales) 32.4%
Inventory (% next year's CGS) 47.6%
Accounts Payable (% next year's CGS) 16.3%
Accrued expenses (next year's SGA adv) 4.8%
Depreciation (years) 5
Refresh cost 70%
Corporate tax rate 40.0%
Corporate expenses 5.0%
Discount rate 12.1%
Long-term growth rate 3.5%
Shares outstanding (K) 9,945

Asset Value 3,30,902

Share value 33.27
Teuer Furniture Pro Forma Income Statement
2012 2013 2014 2015 2016 2017 2018 2019
Sales 148,218 165,024 181,929 199,600 217,540 231,499 242,308 251,122
CGS -61,955 -69,828 -76,969 -84,078 -90,505 -94,907 -97,645 -99,741
SGA (exc adv & dep) -21,253 -23,295 -25,689 -28,131 -30,415 -32,104 -33,266 -34,150
Advertising -10,744 -12,179 -13,399 -14,664 -15,904 -16,779 -17,442 -17,987
Depreciation -1,450 -1,084 -1,469 -2,143 -2,900 -2,853 -2,491 -2,095
Lease (stores) -9,320 -10,613 -11,575 -12,320 -13,092 -13,382 -13,678 -14,106
Corp Expense (inc lease/adv) -7,411 -8,251 -9,096 -9,980 -10,877 -11,575 -12,115 -12,556
Taxes -14,434 -15,909 -17,492 -19,314 -21,539 -23,960 -26,268 -28,195
Net income 21,651 23,864 26,239 28,970 32,308 35,940 39,403 42,292

Parameters:
Corporate tax rate 40%
Corporate expenses 5%

Summary
Sale Growth 11.3% 10.2% 9.7% 9.0% 6.4% 4.7% 3.6%
Teuer Furniture Pro Forma Balance Sheet
2012 2013 2014 2015 2016 2017 2018
Assets
Accounts Receivable 48,200 53,329 59,012 64,745 70,564 75,092 78,598
Inventory 33,343 36,608 39,989 43,046 45,140 46,442 47,438
Total Current Assets 81,543 90,137 99,002 107,790 115,703 121,533 126,036
PPE 3,920 5,686 7,980 10,374 8,357 5,925 4,303
Total Assets 85,463 95,823 106,982 118,164 124,060 127,459 130,340

Liabilities and Equity

Accounts Payable 11,364 12,571 13,732 14,781 15,500 15,948 16,290
Accrued Expenses 1,682 1,876 2,054 2,223 2,346 2,434 2,503
Total Current Liabilities 13,046 14,447 15,786 17,005 17,847 18,382 18,792
Debt 0 0 0 0 0 0 0
Equity 72,417 81,376 91,196 101,159 106,213 109,077 111,547
Total Liabilities and Equity 85,463 95,823 106,982 118,164 124,060 127,459 130,340

Balance sheet check (A=L+E)

Current Asset-Current Liabilities 68,497 75,690 83,216 90,785 97,856 103,152 107,244
Increase in NWC 7,193 7,526 7,570 7,071 5,295 4,092
Teuer Furniture Pro Forma Cash Flow Assets
2012 2013 2014 2015 2016 2017 2018
Sales 148,218 165,024 181,929 199,600 217,540 231,499 242,308
- Costs -112,132 -125,251 -138,198 -151,316 -163,693 -171,600 -176,637
- Taxes -14,434 -15,909 -17,492 -19,314 -21,539 -23,960 -26,268
Net income 21,651 23,864 26,239 28,970 32,308 35,940 39,403
- Capital expenditure -2,229 -2,850 -3,764 -4,537 -883 -42 -869
+ Depreciation 1,450 1,084 1,469 2,143 2,900 2,853 2,491
- Increase in NWC -8,365 -7,193 -7,526 -7,570 -7,071 -5,295 -4,092
Cash flow assets 12,508 14,905 16,418 19,007 27,254 33,076 36,933
Terminal value 24,821 26,385 25,927 26,775.00 34,249.00 37,078 36,933 cash flow discounted to yr 2018
PV 330,902 TV 444,480
Sum of Terminal value 656,648
Asset value 330,902
Share value 33.27

Parameters:
Asset discount rate 12.1%
Long-term growth rate 3.5%
Shares outstanding (K) 9,945

Growth Rates
Sales 165024 181929 199600 217540 231499 242308
Net Income 23864 26239 28970 32308 35940 39403
Cash flow from assets 14905 16418 19007 27254 33076 36933
discounted to yr 2018