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    Sneaker Solution

    Uploaded by

    SuperGuy
    1. The document presents financial projections for a company from 2013 to 2018 including sales, revenues, costs, expenses, cash flows and other financial metrics. 2. Sales increased from 2013 to 2016 before declining in 2017 and 2018. Revenues peaked at $276 million in 2016 while costs such as variable costs and expenses fluctuated over the period. 3. Net present value for the project was $13.36 million with an internal rate of return of 12.82% and a payback period of 5.1 years based on discounted cash flows and an 11% discount rate.

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    © All Rights Reserved
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    Sneaker Solution

    Uploaded by

    SuperGuy
    258 views19 pages
    1. The document presents financial projections for a company from 2013 to 2018 including sales, revenues, costs, expenses, cash flows and other financial metrics. 2. Sales increased from 2013 to 2016 before declining in 2017 and 2018. Revenues peaked at $276 million in 2016 while costs such as variable costs and expenses fluctuated over the period. 3. Net present value for the project was $13.36 million with an internal rate of return of 12.82% and a payback period of 5.1 years based on discounted cash flows and an 11% discount rate.

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    1. The document presents financial projections for a company from 2013 to 2018 including sales, revenues, costs, expenses, cash flows and other financial metrics. 2. Sales increased from 2013 to 2016 before declining in 2017 and 2018. Revenues peaked at $276 million in 2016 while costs such as variable costs and expenses fluctuated over the period. 3. Net present value for the project was $13.36 million with an internal rate of return of 12.82% and a payback period of 5.1 years based on discounted cash flows and an 11% discount rate.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    258 views19 pages

    Sneaker Solution

    Uploaded by

    SuperGuy
    1. The document presents financial projections for a company from 2013 to 2018 including sales, revenues, costs, expenses, cash flows and other financial metrics. 2. Sales increased from 2013 to 2016 before declining in 2017 and 2018. Revenues peaked at $276 million in 2016 while costs such as variable costs and expenses fluctuated over the period. 3. Net present value for the project was $13.36 million with an internal rate of return of 12.82% and a payback period of 5.1 years based on discounted cash flows and an 11% discount rate.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 19

    2013 beginning 2013 2014 2015 2016 2017

    Y0 Y1 Y2 Y3 Y4 Y5
    Sales (units in million) case point 3 1.2 1.6 1.4 2.4 1.8
    Revenue per unit case point 2 115 115 115 115 115
    Total sale revenue 138 184 161 276 207
    Revenues lost case point 4 35 15 0 0 0
    Net sales revenues 103 169 161 276 207
    Variable cost: 55% of revenue case point 8 75.9 101.2 88.55 151.8 113.85
    VC saved: 55% of revenue case point 4 19.25 8.25 0 0 0
    Net VC 56.65 92.95 88.55 151.8 113.85
    SG&A expenses case point 9 7 7 7 7 7
    Endorsement charges case point 10 2 2 2 3 2
    A&P expenses case point 11 25 15 10 30 25
    Depreciation on factory case point 5 3.9 7.5 7.05 6.75 6.45
    Depreciation on equipment case point 6 4 6.4 3.8 2.4 2.2
    EBIT 4.45 38.15 42.6 75.05 50.5
    Taxes @ 40% 1.78 15.26 17.04 30.02 20.2
    NOPAT 2.67 22.89 25.56 45.03 30.3
    Add: Depreciation on factory 3.9 7.5 7.05 6.75 6.45
    Add: Depreciation on equipment 4 6.4 3.8 2.4 2.2
    Operating cash flows 10.57 36.79 36.41 54.18 38.95
    Capital expenditure 170
    Net WC changes 10 1.0725 7.095 -0.86 12.3625 -7.4175
    Terminal years cash flows
    Project Cash flows -180 9.50 29.70 37.27 41.82 46.37
    Project cumulative Cash flows 9.50 39.19 76.46 118.28 164.65
    Discounted cash flows @ 11% -180 8.56 24.10 27.25 27.55 27.52
    Discounted cumulative cash flows 8.56 32.66 59.91 87.46 114.97
    Year 0 1 2 3 4 5
    NPV 13.36 13.36
    IRR 12.82% r=11%
    payback 5 years 0.10 15.35
    Pay back period 5.10 years
    Discounted pay back period 5 years 0.34 65.03
    Discounted pay back period 5.34 years
    2018
    Y6
    0.9
    115
    103.5
    0
    103.5
    56.93
    0
    56.93
    7
    2
    15
    6
    1.2
    15.38
    6.15
    9.23
    6
    1.2
    16.425

    130.19
    146.62
    311.27
    78.39
    193.36
    6
    Capital expenditure in year 0
    Outlay for factory 150
    Purchase of equipment with
    freight/installation 20
    Total Capex 170

    WC requirements in year 0 10

    Total outlay in year 0 180

    cost of equipment 15
    Freight/installation 5
    million
    working capital
    million requirements

    Project's net revenues


    project's net VC

    Inventory: 15, 25% of VC


    AP: 5, 20% of VC
    AR: 8% of project
    revenues
    net WC
    Increase in NWC
    end of the year
    2012 2013 2014 2015 2016
    103 169 161 276
    56.65 92.95 88.55 151.8

    15 14.16 23.24 22.14 37.95


    5 11.33 18.59 17.71 30.36

    0 8.24 13.52 12.88 22.08


    10 11.07 18.17 17.31 29.67
    10 1.07 7.10 -0.86 12.36

    funds employed in WC
    funds already released
    release of WC in the terminal year
    2017 2018
    207 103.5
    113.85 56.925

    28.46
    22.77

    16.56
    22.25
    -7.42 22.25Release of WC in 6th year

    30.53
    8.28
    ear 22.25
    2013 2014 2015 2016 2017 2018
    Depreciation rate on factory cost 2.60% 5.00% 4.70% 4.50% 4.30% 4.00% MACRS
    Depreciation rate on equipment cost 20% 32% 19% 12% 11% 6%

    cost of factory 150


    cost of equipment 20 Total Dep life
    Depreciation on factory 3.9 7.5 7.05 6.75 6.45 6 37.65 39 years
    Depreciation on equipment 4 6.4 3.8 2.4 2.2 1.2 20 5 years

    BV of factory 112.35
    BV of equipment 0
    Working note 1 Working note 2
    Salvage value of factory 102 BV of equipment 0
    BV of factory 112.35 Salvage value of equipment 3
    Loss on SV of factory -10.35 gain on SV 3
    tax saving on above 4.14 tax on above 1.2
    SV 102 SV 3
    cash saved by paying less tax 4.14 cash used in tax payment 1.2
    Total cash inflows from factory 106.14 Total cash inflows from equipment 1.8

    Total Terminal year CFs Net Cash flows from sale of factory+Net Cash flows from sale of equipment+recovery o
    Working note 3
    recovery of WC 22.25

    Total Terminal year CFs 130.19

    h flows from sale of equipment+recovery of wc


    Total sale revenue case point 3
    Variable cost: 38% of revenues case point 8
    G&A expenses case point 9
    A&P expenses case point 10
    Depreciation on equipment case point 5
    EBIT
    technology purchased case point 12
    taxes @ 40%
    NOPAT
    Add: Depreciation on equipment
    OCF
    Capital expenditure case point 5
    Net WC changes case point 6
    Terminal years cash flows
    Project Cash flows
    Project cumulative Cash flows

    NPV
    IRR
    Payback
    2013
    beginning 2013 2014 2015
    Y0
    52.50 72.45 92.58
    19.95 27.53 35.18
    6.30 7.25 7.41
    3 2 2
    1.6 2.56 1.52
    21.65 33.11 46.47
    -50
    20 8.66 13.25 18.59
    -30 12.99 19.87 27.88
    1.60 2.56 1.52
    -30 14.59 22.43 29.40
    -8
    -15
    17.32
    -53 14.59 22.43 46.72
    -53 14.59 37.02 83.74
    -53 -38.41 -15.98 30.74
    8.59
    21.75%
    2.34 2.00years 0.34
    in million $
    market share for co 0.15
    variable cost % on sales 0.38
    cost of equipment 8
    2013
    Size of hiking shoe market 350
    growth rate of hiking shoe market
    market share for co 0.15
    Total sale revenue 52.50
    G&A expenses % on revenues 0.12
    depreciation rate 0.2
    2014 2015
    402.5 462.875
    0.15 0.15
    0.18 0.2
    72.45 92.58
    0.1 0.08
    0.32 0.19
    Purchase of equipment 8million
    2013 2014
    rate of depreciation 20% 32%
    Depreciation on equipment 1.6 2.56

    working capital requirements begin


    2013 2014
    AP 10 0.00
    AR 25 0.00
    net WC 15 0
    Increase in NWC 15 0.00

    WC requirements in year 0 15
    Total outlay in year 0 23
    2015
    19%
    1.52

    end
    2015
    10.00
    25.00
    15
    15.00 Release of WC in 6th year
    Terminal year CF
    Release of WC 15
    sale of equip at BV 2.32
    Total CFs in terminal year 17.32

    2013 2014 2015

    Depreciation on equipment 1.6 2.56 1.52


    total dep 5.68
    cost 8
    BV 2.32
    No gain no loss
    Cash flows
    Sneaker 2013 Persistence
    2013 beginning -180 -53
    2013 9.50 14.59
    2014 29.70 22.43
    2015 37.27 46.72
    2016 41.82
    2017 46.37
    2018 146.62
    Discount rate 11% 14%
    NPV 13.36 8.59
    IRR 12.82% 21.75%
    Pay back 5.10 years 2.34
    Cash flows
    Sneaker 2013 Persistence P with replacement
    2013 beginning -180 -53 -53
    2013 9.50 14.59 14.59
    2014 29.70 22.43 22.43
    2015 37.27 46.72 -6.28
    2016 41.82 14.59
    2017 46.37 22.43
    2018 146.62 46.72
    Discount rate 11% 14%
    NPV 13.36 8.59 14.39
    IRR 12.82% 21.75% 21.75%
    Pay back 5.10 years 2.34
    with replacement

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