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Lecture 14 - Franklin Covey Case

Lecture 14 - Franklin Covey Case - FranklinCoveyCase...

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    Franklin Covey Case
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Given Information Purchase Price of $32mm Revenue of $100mm 60% Gross Margin 12% EBITDA Margin Balance Sheet Details
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2006 2007 2008 Current Assets: Cash and Cash Equivalents $55 $45 $45 Trade Accounts Receivable $3,500 $4,500 $6,500 Inventories $16,500 $15,500 $12,500 Other Current Assets $2,500 $2,600 $2,300 Total Current Assets $22,555 $22,645 $21,345 Property, Plant & Equipment $5,300 $7,600 $6,200 Current Liabilities: Accounts Payable $7,000 $5,700 $5,800 Accrued Liabilities $8,500 $7,800 $6,700 2200 UNEARNED REVENUE $340 $300 $300 Total Current Liabilities $15,840 $13,800 $12,800 Franklin Covey Products Model Account Balances Thousands (000)
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Income Statement Actual Projected 2008 2009 2010 2011 2012 2013 Revenue 100,00 0 106,000 113,420 119,545 123,609 126,699 Gross Profit 60,000 64,660 70,320 75,313 79,110 82,355 Gross Margin 0.60 0.61 0.62 0.63 0.64 0.65 EBITDA 12,000 13,780 15,879 17,932 19,777 20,272 EBITDA Margin 0.12 0.13 0.14 0.15 0.16 0.16
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Assignment Create a plan for financing the purchase How much debt?   How much equity?   What kinds of debt?   How will the debt be structured?   How will the equity be structured?   How much will management own?    Are there different classes of stock and if so, what are the types and  terms? What will the capitalization table look like?   Where will you get the financing?  DSCG > 1 Cash flows should be able to pay down debt
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Some of Our Initial Questions What types and amounts of debt financing can the business get?
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