New Heritage Doll Company: Capital Budgeting

NPV Analysis for Match My Doll Clothing Line Extension

2010
Revenue
Revenue Growth

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

4,500

6,860

8,409

9,082

9,808

10,593

11,440

12,355

13,344

14,411

52.4%

22.6%

NA

8.0%

8.0%

8.0%

8.0%

8.0%

8.0%

8.0%

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

575

575

587

598

610

622

635

648

660

674

2,035

3,404

4,291

4,669

5,078

5,521

6,000

6,519

7,079

7,685

152

152

152

152

164

178

192

207

224

242

2,762

4,131

5,029

5,419

5,853

6,321

6,827

7,373

7,963

8,600

Selling, General & Administrative

1,250

1,155

1,735

2,102

2,270

2,452

2,648

2,860

3,089

3,336

3,603

Total Operating Expenses

1,250

3,917

5,866

7,132

7,690

8,305

8,969

9,687

10,462

11,299

12,203

583

994

1,277

1,392

1,503

1,623

1,753

1,893

2,045

2,209

Total Production Costs

Operating Profit

(1,250)

Working Capital Assumptions:

Minimum Cash Balance as % of Sales

NA

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

Days Sales Outstanding

NA

59.2x

59.2x

59.2x

59.2x

59.2x

59.2x

59.2x

59.2x

59.2x

59.2x

Inventory Turnover (prod. cost/ending inv.)

Days Payable Outstanding (based on tot. op. exp.)

NA

7.7x

8.3x

12.7x

12.7x

12.7x

12.7x

12.7x

12.7x

12.7x

12.7x

0.0x

30.8x

30.9x

31.0x

31.0x

31.0x

31.0x

31.0x

31.0x

31.0x

31.0x

Capital Expenditures

1,470

952

152

152

334

361

389

421

454

491

530

Net Working Capital Accounts

Cash
Accounts Receivable
Inventory
Accounts Payable
Net Working Capital

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

317

484

593

640

692

747

807

871

941

1016

800

NPV Analysis
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

New Heritage Doll Company: Capital Budgeting

NPV Analyss for Design Your Own Doll

2010
Revenue

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

6,000

14,360

20,222

21,435

22,721

24,084

25,529

27,061

28,685

Revenue Growth

NA

139.3%

40.8%

6.0%

6.0%

6.0%

6.0%

6.0%

6.0%

1,650

1,683

1,717

1,751

1,786

1,822

1,858

1,895

1,933
16,712

Production Costs
Fixed Production Expense (excl depreciation)

Additional development costs (IT personnel)

435

Variable Production Costs

2,250

7,651

11,427

12,182

12,983

13,833

14,736

15,694

Depreciation

310

310

310

436

462

490

520

551

584

435

4,210

9,644

13,454

14,369

15,231

16,145

17,113

18,140

19,229

Total Production Costs

Selling, General & Administrative

1,201

1,240

2,922

4,044

4,287

4,544

4,817

5,106

5,412

5,737

Total Operating Expenses

1,201

435

5,450

12,566

17,498

18,656

19,775

20,962

22,219

23,553

24,966

(1,201)

(435)

550

1,794

2,724

2,779

2,946

3,123

3,310

3,508

3,719

Minimum Cash Balance as % of Sales

NA

NA

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

Days Sales Outstanding

NA

NA

59.2x

59.2x

59.2x

59.2x

59.2x

59.2x

59.2x

59.2x

59.2x

Inventory Turnover (prod. cost/ending inv.)

NA

NA

12.2x

12.3x

12.6x

12.7x

12.7x

12.7x

12.7x

12.7x

12.7x

Days Payable Outstanding (based on tot. op. exp.)

NA

NA

33.7x

33.8x

33.9x

33.9x

33.9x

33.9x

33.9x

33.9x

33.9x

Operating Profit

Working Capital Assumptions:

Capital Expenditures

4,610

310

310

2,192

826

875

928

983

1,043

1,105

Net Working Capital Accounts

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Cash
Accounts Receivable
Inventory
Accounts Payable
Net Working Capital

474
1,000

1135

1598

1694

1796

1904

2018

2139

2267

NPV Analysis
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020