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    Pacific Grove Spice Company

    Uploaded by

    Laura Javela
    The document summarizes financial projections for Pacific Grove Spice Company from 2012-2015. It shows increasing annual net sales, net income, assets and shareholders' equity over this period. A capital budgeting analysis for a new television program estimates it would have an internal rate of return of 41.28% and positive net present values at discount rates of 10-20%, indicating it would be a profitable investment opportunity.

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    Pacific Grove Spice Company

    Uploaded by

    Laura Javela
    238 views3 pages
    The document summarizes financial projections for Pacific Grove Spice Company from 2012-2015. It shows increasing annual net sales, net income, assets and shareholders' equity over this period. A capital budgeting analysis for a new television program estimates it would have an internal rate of return of 41.28% and positive net present values at discount rates of 10-20%, indicating it would be a profitable investment opportunity.

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    The document summarizes financial projections for Pacific Grove Spice Company from 2012-2015. It shows increasing annual net sales, net income, assets and shareholders' equity over this period. A capital budgeting analysis for a new television program estimates it would have an internal rate of return of 41.28% and positive net present values at discount rates of 10-20%, indicating it would be a profitable investment opportunity.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    238 views3 pages

    Pacific Grove Spice Company

    Uploaded by

    Laura Javela
    The document summarizes financial projections for Pacific Grove Spice Company from 2012-2015. It shows increasing annual net sales, net income, assets and shareholders' equity over this period. A capital budgeting analysis for a new television program estimates it would have an internal rate of return of 41.28% and positive net present values at discount rates of 10-20%, indicating it would be a profitable investment opportunity.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 3

    Pacific Grove Spice Company

    Exhibit 1 - Income Statement ($ in millions except for price per share)

    Income Statement 06/30/12 06/30/13 06/30/14 06/30/15


    Net Sales TV $8.100 $8.505 $8.930 $9.377
    Net Sales $93.081 $105.182 $116.751 $127.259
    TOTAL Net Sales $101.181 $113.687 $125.682 $136.636
    Cost of Goods Sold 59.191 66.507 73.524 79.932
    Gross Profit Margin 41.990 47.180 52.158 56.704

    R&D Expense 1.489 1.683 1.868 2.036


    Depreciation Expense 0.288 0.288 0.288 0.288
    Promocional TV 0.891 0.936 0.982 1.031
    SG&A Expense 30.081 33.930 37.615 40.966
    Earnings Before Interest & Taxes 9.241 10.343 11.405 12.382

    Interest Expense 3.293 3.696 4.014 4.249


    Earnings Before Income Taxes 5.948 6.648 7.391 8.133

    Income Taxes 1.606 1.795 1.996 2.196


    Net Income 4.342 4.853 5.396 5.937

    Growth rate of sale 15.00% 13.00% 11.00% 9.00%


    Income tax rate assumed 27.00% 27.00% 27.00% 27.00%
    Price/Earnings Ratio
    Market Value of Equity

    Common Shares Outstanding


    Price per share

    Note: 2012-2015 are projected data


    Pacific Grove Spice Company

    Exhibit 2 - Balance Sheet ($ in millions)

    Assets 06/30/12 06/30/13 06/30/14 06/30/15

    Cash $16.102 $16.727 $17.326 $17.873


    Accounts Receivable 20.791 23.360 25.825 28.076
    Inventories 14.798 16.627 18.381 19.983
    Prepaid Expenses 1.214 1.364 1.508 1.640
    Total Current Assets 52.905 58.078 63.040 67.571

    Net Property & Equipment * 26.309 29.579 32.706 35.547


    Other Long-Term Assets 4.553 5.116 5.656 6.149
    Total Assets 83.767 92.773 101.402 109.267

    Growth rate of assets 37.2% 10.8% 9.3% 7.8%

    Liabilities & Owners' Equity 06/30/12 06/30/13 06/30/14 06/30/15

    Bank Notes Payable $16.840 $18.922 $20.918 $22.741


    Accounts Payable 4.865 5.466 6.043 6.570
    Current Portion of Long-Term Debt 1.614 1.751 1.842 1.869
    Accrued Expenses 1.680 1.887 2.086 2.268
    Total Current Liabilities 24.999 28.027 30.889 33.449

    Long-Term Debt 24.204 26.258 27.614 28.028


    Total Liabilities 49.203 54.285 58.503 61.477

    Common Stock 6.881 6.881 6.881 6.881


    New Stock Issue ( MV of new stock) 2.216 2.216 2.216 2.216 20% 11.08
    Premium on stock ( BV of stock) 8.864 8.864 8.864 8.864 80%
    Retained Earnings 14.659 19.512 24.908 30.844
    Total Shareholder Equity 32.621 26.393 31.789 37.726

    Total Liabilities & Net Worth 81.824 80.678 90.292 99.202

    * Net property & equipment for all years is calculated as net property & equipment from the prior year, plus capital expenditures in the same year, minus
    depreciation expense in the same year. Depreciation expense is included in reported operating expenses; it is not broken out separately.

    Note: 2012-2015 are projected data

    06/30/12 06/30/13 06/30/14 06/30/15


    Indice multiplicador de capital 2.57 3.52 3.19 2.90
    Deuda Total (Millions) 42.66 46.93 50.37 52.64
    % de Deuda/Activos 51% 51% 50% 48%
    Debt as % of Owners Equity 131% 178% 158% 140%
    Pacific Grove Spice Company

    Exhibit 3 - Capital Budgeting Analysis of Television Program Opportunity

    Initial Investment Cash Flows Year 0


    Equipment -$1,440,000

    Growth Rate of Sales 5.0% 5.0% 5.0% 5.0%


    Operating Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5

    Sales $8,100,000 $8,505,000 $8,930,250 $9,376,763 $9,845,601


    Cost of Goods Sold at 58.5% of sales 4,738,500 4,975,425 5,224,196 5,485,406 5,759,676
    Gross Profit Margin 3,361,500 3,529,575 3,706,054 3,891,356 4,085,924

    Promotion Expense at 11% of sales 891,000 935,550 982,328 1,031,444 1,083,016


    General & Administrative Expense 760,000 798,000 837,900 879,795 923,785
    Depreciation Expense 288,000 288,000 288,000 288,000 288,000
    Incremental Operating Profit 1,422,500 1,508,025 1,597,826 1,692,118 1,791,123

    Income Taxes at 27% 384,075 407,167 431,413 456,872 483,603


    Incremental Net Income 1,038,425 1,100,858 1,166,413 1,235,246 1,307,520

    + Depreciation Expense 288,000 288,000 288,000 288,000 288,000


    Incremental Operating Cash Flow 1,326,425 1,388,858 1,454,413 1,523,246 1,595,520

    Yearly Net Working Capital Investment Year 1 Year 2 Year 3 Year 4 Year 5
    Additional A/R at 75 Days Sales Outstanding $1,664,384 $83,219 $87,380 $91,749 $96,337
    Additional Inventory at 4 Inventory Turns 1,184,625 59,231 62,193 65,302 68,568
    Additional A/P at 30 Days COGS 389,466 19,473 20,447 21,469 22,543
    Total NWC Investment -2,459,543 -122,977 -129,126 -135,582 -142,361

    Terminal Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5


    Recovery of NWC $2,989,590

    Total Project Cash Flows -$1,440,000 -$1,133,118 $1,265,881 $1,325,287 $1,387,664 $4,442,748

    Internal Rate of Return 41.28%

    Net Present Value at 20% $1,716,414


    Net Present Value at 15% $2,405,498
    Net Present Value at 10% $3,278,174

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