Case 2 : Teuer Furniture (A)

Discounted Cash Flow Valuation

Section - A
Group 4
PGP/19/016
PGP/19/102
PGP/19/148
PGP/19/176

Deepika Dudhey
Shilpi Jain
Manan Agrawal
Thilak Kumar K
on
These spreadsheet exhibits relate to the case Teuer Furniture (A): Discounted Cash
Flow Valuation, Case
#KEL778.
©2015 by the Kellogg School of Management at Northwestern University. This case was
prepared by
Professor Mitchell A. Petersen. Teuer Furniture is a fictional company whose
profile was created based on
data from real industry leaders. Cases are developed solely as the basis for class
discussion. Cases are not
intended to serve as endorsements, sources of primary data, or illustrations of
effective or ineffective
management. To order copies or request permission to reproduce materials, call 800-
545-7685 (or 617-7837600 outside the United States or Canada) or e-mail
custserv@hbsp.harvard.edu. No part of this publication
may be reproduced, stored in a retrieval system, used in a spreadsheet, or
transmitted in any form or by any
means—electronic, mechanical, photocopying, recording, or otherwise—without the
permission of Kellogg
Case Publishing.
low Valuation, Case

as prepared by
as created based on
cussion. Cases are not
e or ineffective
545-7685 (or 617-783part of this publication
d in any form or by any
ermission of Kellogg
Exhibit 1: Teuer Furnitures Showrooms and Square Footage
Stores
Opened
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015

Total
Stores
1
3
4
5
6
2
1
2
2
3
2
2
2

763655
764480

1
4
8
13
19
21
22
24
26
29
31
33
35

SQ FT
Opened
17,200
17,600
18,500
21,100
22,100
15,500
14,500
14,700
15,400
16,300
16,000
16,000
15,000

1290960
48900

Total
SQ FT
17,200
70,000
144,000
249,500
382,100
413,100
427,600
457,000
487,800
536,700
568,700
600,700
630,700

40
35
30
25
20
15
10
5
0
2003

2005
40

700,000

35

600,000

30

500,000

25

400,000

20

300,000

15

200,000

10

100,000

5
0
2003

2005

2007

2009

Number of Showrooms

2011

2013

Total Square Feet

0
2015
Exhibit 2: Economic Indicators: GDP and Furniture Sales Growth
CPI index
Inflation (CPI)
GDP (T$)
GDP growth
Furniture sales ($B)
Furniture sales growth

2002
180.9
10,642
94.44

2003
184.3
1.9%
11,142
4.7%
96.7
2.4%

2004
190.3
3.3%
11,853
6.4%
103.8
7.3%

2005
196.8
3.4%
12,623
6.5%
109.1
5.2%

2006
201.8
2.5%
13,377
6.0%
112.8
3.4%

2007
210.0
4.1%
14,029
4.9%
111.1
-1.5%

2008
210.2
0.1%
14,292
1.9%
99.6
-10.4%

2009
215.9
2.7%
13,974
-2.2%
86.3
-13.4%

2010
219.2
1.5%
14,499
3.8%
87.3
1.2%

2011
225.7
3.0%
15,076
4.0%
90.1
3.2%

2012
229.6
1.7%
15,685
4.0%
93.1
3.4%

10.0%

5.0%

0.0%
2003

2005

2007

2009

2011

2013

-5.0%

-10.0%

-15.0%
GDP Growth

Furniture Sales Growth

Inflation (CPI)

2015

2017

2013
233.5
1.7%
16,238
3.5%
95.9
3.0%

2014
237.7
1.8%
17,049
5.0%
98.6
2.8%

2015
242.3
1.9%
18,012
5.6%
101.2
2.6%

2016
247.4
2.1%
19,021
5.6%
103.6
2.4%

2017
252.1
1.9%
20,078
5.6%
105.9
2.2%

2018
256.6
1.8%
21,101
5.1%
108.0
2.0%

2019
261.3
1.8%
110.2
2.0%
Exhibit 3: Teuer Furniture Income Statement
2003
Sales
Cost of goods sold
Selling, general and admin
Advertising
Depreciation
Lease
Corporate expense
Taxable income
Tax loss carry forward
Taxes
Net income
Parameters:
Corporate tax rate

Sales Growth

2004
2,057
-1,463
-410
-203
-72
-250
-185
-526
526
0
-526

2005
10,415
-7,057
-1,812
-1,019
-307
-1,080
-729
-1,588
2,114
0
-1,588

2006
26,701
-17,424
-4,958
-2,411
-669
-2,330
-1,602
-2,693
4,807
0
-2,693

2007
51,540
-30,730
-9,230
-4,588
-1,264
-4,240
-3,092
-1,604
6,411
0
-1,604

2008
79,191
-43,834
-13,576
-6,585
-2,075
-6,770
-4,751
1,600
4,811
0
1,600

2009
90,680
-47,290
-14,679
-7,532
-2,188
-7,380
-5,441
6,170
0
-543
5,626

2010
111,451
-49,068
-16,471
-8,367
-2,032
-7,712
-5,573
22,229
0
-8,892
13,337

2011
134,093
-55,487
-18,698
-9,545
-1,820
-8,450
-6,705
33,389
0
-13,356
20,033

2012
148,218
-61,955
-21,253
-10,744
-1,450
-9,320
-7,411
36,086
0
-14,434
21,651

406.44%

156.37%

93.03%

53.65%

14.51%

22.91%

20.32%

10.53%

40%
Exhibit 4: Teuer Furniture Balance Sheet
2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

0
671
671
358
1,029

751
3,151
3,902
1,461
5,364

3,479
8,216
11,695
2,969
14,663

8,675
15,125
23,800
5,270
29,070

16,946
20,908
37,853
8,065
45,918

25,272
21,715
46,987
6,914
53,900

29,059
24,868
53,927
5,119
59,046

36,625
26,808
63,433
3,839
67,272

42,421
29,216
71,637
3,142
74,779

48,200
33,343
81,543
3,920
85,463

236
29
265
0
764
1,029

1,158
145
1,303
0
4,061
5,364

2,781
358
3,139
0
11,525
14,663

5,119
658
5,777
0
23,293
29,070

7,228
958
8,186
0
37,732
45,918

7,767
1,055
8,822
0
45,079
53,900

8,277
1,203
9,480
0
49,565
59,046

9,133
1,359
10,493
0
56,779
67,272

9,986
1,519
11,505
0
63,274
74,779

11,364
1,682
13,046
0
72,417
85,463

Assets
Accounts Receivable
Inventory
Total Current Assets
PPE
Total Assets
Liabilities and Equity
Accounts Payable
Accrued Expenses
Total Current Liabilities
Debt
Equity
Total Liabilities and Equity
Balance sheet check
Exhibit 5: Teuer Furniture Income Statement for Individual Showrooms
#
2003

Avg Size
1

17,200

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

9
10

11

12

13

14

15

16

Sales

2,057

3,754

5,224

6,148

6,341

5,503

5,636

5,871

6,034

6,235

6,430

6,618

6,799

6,971

7,133

7,299

CGS

1,463

2,309

3,018

2,394

2,753
2,311

2,194

2,150

2,416

2,476

2,554

2,629

2,700

2,769

2,833

2,899

SGA

410

640

857

856

815

765

767

687

791

848

874

900

925

948

970

993

203
334

399

434

422

423

391

401

457

449

463

477

490

502

514

526

72

72

72

72

72

65

65

65

65

65

0
0

250

250

250

250

250

250

302

302

302

302

302

302

365

365

365

365

10

11

12
13

14

15

Sales

6,661

11,907

15,158

16,488

15,446

16,187

17,279

17,869

18,464

19,041

19,599

20,134

20,643

21,123

21,615

CGS

4,748

7,428

7,894

7,216

6,031

6,675

6,691

7,176

7,330

7,559
7,781

7,993

8,195

8,386

8,581

SGA

1,171

2,148

2,631

2,323

2,239

2,224

2,395

2,319

2,511

2,590

2,665

2,738

2,807

2,873

2,940

Advertising

685

971

1,266

1,213

1,235

1,241

1,245
1,287

1,329

1,371

1,411

1,450

1,486

1,521

1,556

Depreciation

235

235

235

235

235

187

187

187

187

187

830

830

830

830

830

830
1,003

1,003

1,003

1,003

1,003

1,003

1,212

1,212

1,212

10

11

12

13

14

Sales

9,570

16,651

19,785

20,951

22,847
24,451

24,499

25,315

26,108

26,872

27,605

28,303

28,962

29,636

CGS

6,978

10,917

11,430

8,499

9,387

9,857

9,042

10,050

10,365

10,668

10,959

11,236

11,498

11,765

SGA

1,953

2,977

3,371

3,039

3,021
3,228

3,693

3,443

3,551

3,655

3,754

3,849

3,939

4,030

1,041

1,488

1,587

1,598

1,605

1,645

1,793

1,823

1,880

1,935

1,988

2,038

2,085

2,134

Advertising
Depreciation
Lease
2004

17,600

Lease
2005
4

18,500

Advertising
Depreciation
Lease
2006

21,100

Sales

363

363

363

363

363

301

301

301

301

301

1,250

1,250

1,250

1,250

1,250

1,250

1,510

1,510
1,510

1,510

1,510

1,510

1,825

1,510

10

11

12

13

13,583

21,142

23,592

29,702

34,105

34,824

35,984

37,110

38,197

39,239

40,231
41,167

42,125

CGS

9,526

11,229

13,594

9,902

13,259

13,932

14,286

14,733

15,164

15,578

15,972

16,343

16,724

SGA

2,767

4,016

4,237

3,780

4,895

4,946

4,894

5,047

5,195

5,337

5,471

5,599
5,729

1,400

1,784

1,964

2,014

2,327

2,287

2,591

2,672

2,750

2,825

2,897

2,964

3,033

594

594

594

594

594

490

490

490

490

490

1,910

1,910

1,910
1,910

1,910

1,910

2,309

2,309

2,309

2,309

2,309

2,309

2,791

10

11

12

Sales

15,435

22,001

30,466

39,628

43,541

45,542
46,967

48,343

49,662

50,917

52,102

53,315

CGS

11,205

14,801

16,422

15,232

17,856

18,080

18,646

19,192

19,716

20,214

20,685

21,166

SGA

3,050

3,878

5,471

5,166

5,917

6,194

6,388

6,575

6,754

6,925
7,086

7,251

1,578

1,986

2,458

2,748

3,109

3,279

3,382

3,481

3,576

3,666

3,751

3,839

812

812

812

812

812

655

655

655

655

2,530

2,530

2,530
2,530

2,530

2,530

3,058

3,058

3,058

3,058

3,058

3,058

10

11

Sales

3,187

5,176

7,244

9,257

10,461

10,921

11,241

11,547

11,839
12,115

12,397

CGS

2,053

3,467

4,421

3,764

4,153

4,336

4,462

4,584

4,700

4,809

4,921

SGA

Advertising
Depreciation
Lease
2007

22,100

Advertising
Depreciation
Lease
2008

15,500

522

951

1,225

1,243

1,423
1,485

1,529

1,570

1,610

1,648

1,686

Advertising

326

499

598

675

753

786

809

831

852

872

893

Depreciation

185

185

185

185

185

152

152

610
610

610

610

610

610

737

737

737

737

Lease
2009

14,500

152
737

10

Sales

1,437

2,507

3,540

4,481
5,054

5,266

5,410

5,546

5,676

5,808

CGS

1,021

1,652

1,887

1,779

2,007

2,091

2,148

2,202

2,253

2,306

SGA

257

480

615

609

687

716

736

754

772

790

158

227
303

323

364

379

389

399

409

418

79

79

79

79

79

64

280

280

280

280

280

280

338

338

338

Advertising
Depreciation
Lease
2010

2
14,700

64
338

Sales

3,008

5,300

7,288

9,207

10,364

10,778

11,050

11,307

11,570

CGS

2,226

3,526

4,096

3,655

4,115

4,279

4,387
4,489

4,593

SGA

623

1,028

1,261

1,252

1,410

1,466

1,503

1,538

1,574

Advertising

353

473

598

663

746

776

796

814

833

Depreciation

150

150

150

150

150

0
0

123

565

565

565

565

565

565

683

683

Sales

3,354

5,879

8,069

10,174

11,430

11,863

12,139

12,421

CGS

2,357
3,745

4,535

4,039

4,538

4,709

4,819

4,931

SGA

Lease
2011

15,400

683

701

1,076

1,396

1,384

1,555

1,613

1,651

1,689

Advertising

358

523

662

733

823

854

874

894
Depreciation

160

160

160

160

160

610

610

610

610

610

610

737

610

Sales

5,379

9,411

12,891

16,223
18,191

18,842

19,280

CGS

3,814

5,995

7,245

6,441

7,222

7,480

7,654

SGA

1,038

1,722

2,230

2,206

2,474

2,562

2,622

838

1,057

1,168

1,310

1,357

1,388

Lease
2012

16,300

Advertising
570

Depreciation

259

259

259

259

259

1,000

1,000

1,000

1,000

1,000

1,000

1,209

Sales

3,622

6,326

8,647

10,861

12,155

12,590

CGS
2,568

4,029

4,860

4,312

4,825

4,998

SGA

Lease
2013

16,000

699

1,158

1,496

1,477

1,653

1,712

Advertising

384

563

709

782

875

906

Depreciation

172

172

172

172

172
0

668

668

668

668

668

668

Sales

3,731

6,503

8,872

11,122

12,447

CGS

2,097

2,582

3,522

4,416

4,941

SGA

720

1,190

1,535

1,513
1,693

720

1,190

1,535

1,513

1,693

175

175

175

175

175

682

682

682

682

Sales

3,597

6,257

8,520

10,680

CGS

1,428

2,484

3,382

4,240

SGA
Lease
2014

16,000

Advertising
Depreciation
Lease
2015

15,000

682

694

1,145

1,474

1,453

Advertising

381

557

699

769

Depreciation

167

167

167

167

652

652

652

652

Lease

Parameters:
Lease rate (2013)
Lease inflation

20.88
2.0%
Exhibit 6: Teuer Furniture Balance Sheet for Individual Showrooms
#
2003

Avg Size
1

17,200

Cap expenditure

2003
0

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

10

11

12

13

14

15

2,040
1,700

1,745

1,742

1,902

2,020

2,083

2,144

2,203

2,259

2,311

324

671

1,090

1,330

1,206

1,167

980

972

1,082

1,027

1,090

1,216

1,251

236

396

448

405

403

350
345

370

369

390

416

29

49

62

61

61

53

54

57

58

PPE
Cap expenditure

1,285

1,318

1,349

1,380

428

440

451

462

473

58

64

66

68
70

71

73

260

195

130

65

10

11

12

13

14

2,292

3,870

5,029

5,526

5,276

5,599

5,612

5,691
5,982

9,064

9,329

9,584

9,826

10,055

1,175

Accts receivable
Inventory

2018

4
1,975

Accr expenses
17,600

2017

3
1,665

Accts payable

2016

2
1,187

Inventory

2004

2015

1
751

358

Accts receivable

936

2,061

3,590
4,304

3,352

2,851

3,042

3,248

3,397

3,619

3,598

3,704

3,805

3,901

3,992

4,085

Accts payable

762

1,255

1,421

1,124

1,025

1,090

1,124

1,139

1,153

1,232

1,268

1,303

1,336

1,367

1,399

Accr expenses
95

158

193

173

162

162

175

177

179

190

196

201

206

211

216

936

748

561

374

187

10

11

12

13

2005

4
18,500

Cap expenditure

1,814

Accts receivable

1,506
3,140

5,508

6,296

6,231

7,149

7,751

7,950

8,202

8,459

8,707

8,944

9,170

9,384

Inventory

3,296

5,271

4,640
3,975

4,075

4,427

4,354

5,114

4,934

5,078

Accts payable

1,078

1,760

1,742

1,381

1,523

1,572

1,565

1,631

1,689

Accr expenses

138

212

240

203

240

244

251

259

2006

21,100

Cap expenditure
0

5,217

5,349

5,473

5,600

1,739

1,786

1,832

1,874

1,918

261

268

276

283

289

296

1,506

1,205

904

603

301

7
8

10

11

12

2,971

Accts receivable

2,450
4,433

6,593

7,974

10,040

10,908

11,761

11,659

12,024

12,376

12,713

13,035

13,338

Inventory

4,344

6,518

6,635

5,870

6,689

6,854

6,348

7,013

7,218
7,415

7,603

7,779

7,960

Accts payable

1,533

2,227

2,181

1,889

2,165

2,325

2,377

2,401

2,472

2,539

2,603

2,664

2,726

Accr expenses

193

272

300

291

337

343

362

371

381

392

402
411

421

2,450

1,960

1,470

980

490

10

11

2007

22,100

Cap expenditure

4,058

Accts receivable

3,277
4,817

6,829

9,849

12,400
13,920

14,756

15,217

15,663

16,091

16,497

16,881

Inventory

5,232

6,246

8,710

7,320

8,121

9,022

8,876

9,135

9,385

9,622

9,846

10,075

Accts payable

1,732

2,480

2,712

2,631

2,712

2,919

3,039

3,128
3,214

3,295

3,372

3,450

Accr expenses

213

293

362

381

436

435

469

483

496

508

520

532

3,277

2,622

1,966

1,311

10

2008

15,500

Cap expenditure

2
3

1,048

1,758

2,212

2,905

3,389

3,538

3,642

3,741

3,836

3,925

1,028

1,711

2,147

1,727

349

547

662

924

Accts receivable
Inventory
Accts payable
Accr expenses
2009

14,500
Cap expenditure

761
1,911

2,064

2,124

2,182

2,237

2,289

2,343

586

690

707

727

747

766

784

802

43

72

88

94

101

109

112

115

118

121

124

924

739
554

370

185

761

609

457

394

Accts receivable
Inventory
Accts payable
Accr expenses
2010

14,700

Cap expenditure

484

840

1,191

1,452

1,638

1,706

1,753
1,797

1,839

488

882

881

823

955

995

1,022

1,048

1,073

1,097

171

261

327

367

376

281

327

341

350

359

21

34

43

44

50

53

54
55

394

315

236

158

79

57

58

322

258

752

Accts receivable
Inventory

322

8
616

956

1,787

2,361

2,983

3,358
3,492

3,580

3,664

1,013

1,787

1,913

1,740

1,959

2,037

2,088

2,137

2,186

Accts payable

348

577

683

596

671

697

715

732

749

Accr expenses

44

71

91

92

103

108
110

113

116

752

602

451

301

150

1,093

1,905

2,614

3,296

3,703

3,844

3,933

1,067

1,795

2,158

387

623

2011
2

15,400

Cap expenditure
Inventory
Accts payable
Accr expenses
2012

616

798

Accts receivable

16,300

Cap expenditure

1,923

2,160

2,242

2,294

2,347

739

658

740

768

786

804

47

76

99

102

114

118

121
124

798

638

479

319

160

1,743

3,049

4,177

5,256

5,894

6,105

1,293

Accts receivable
Inventory

1,708

2,854

3,448

3,066

3,438

3,561

3,643
Accts payable

617

977

1,181

1,050

1,177

1,219

1,248

Accr expenses

79

123

158

162

182

188

192

1,293

1,034

776

517

259

1,174

2,050
2,802

3,519

3,938

1,918

2,313

657

2013

16,000

Cap expenditure

860

Accts receivable
Inventory

2,053

2,297

2,379

792

703

787

815

83

106

108

121

126

688

516

344

172

0
0

Accts receivable

1,209

2,107

2,875

3,604

Inventory

1,229

1,677

2,102

2,352

421

574

720

805

114

147

145

163

701

526

350

175

1
2

Accts receivable

1,165

2,027

2,760

Inventory

2,018

Accts payable
Accr expenses
860
2014

16,000

Cap expenditure

876

Accts payable
Accr expenses
876
2015

2
Cap expenditure

15,000

837
1,182

1,610

Accts payable

405

551

Accr expenses

73

97

103

670
502

335

837

691
Exhibit 7: Teuer Furniture Cash Flow Assets
2003
Sales
- Costs
- Taxes
Net income
- Capital expenditure
+ Depreciation
- Increase in NWC
Cash flow to assets

0
-358
0
-406
-764

2004
2,057
-2,582
0
-526
-1,175
72
-2,193
-3,823

2005
10,415
-12,003
0
-1,588
-1,814
307
-5,957
-9,052

2006
26,701
-29,394
0
-2,693
-2,971
669
-9,467
-14,461

2007
51,540
-53,144
0
-1,604
-4,058
1,264
-11,645
-16,043

2008
79,191
-77,591
0
1,600
-924
2,075
-8,498
-5,747

2009
90,680
-84,510
-543
5,626
-394
2,188
-6,281
1,139

5.4033317 2.7158396 1.5892057 1.2300833 0.7297668 0.7391534 1.3523104

2010
111,451
-89,222
-8,892
13,337
-752
2,032
-8,494
6,123

2011
134,093
-100,704
-13,356
20,033
-1,122
1,820
-7,192
13,539

0.8466941 1.1630737

2012
148,218
-112,132
-14,434
21,651
-2,229
1,450
-8,365
12,508
Exhibit 8: Forecasting Sales Revenue and Costs
Sales growth

CGS

SGA

Year
2003
2004
2005
2006
2007
2008
2009
2010
2011
Average

2
73.6%
72.9%
76.6%
73.8%
64.5%
60.5%
69.0%
70.4%

3
34.6%
29.2%
32.6%
28.8%
36.8%
35.6%
36.6%

4
19.5%
21.4%
22.2%
24.4%
26.1%
23.6%

5
15.1%
8.1%
7.8%
11.3%
6.3%

6
0.2%
3.6%
3.7%
-1.3%

7
1.2%
3.4%
-3.1%

70.2%

33.5%

22.9%

9.7%

1.5%

0.3%

Year
2003
2004
2005
2006
2007
2008
2009
2010
2011
Average

1
71.1%
71.3%
72.9%
70.1%
72.6%
64.4%
71.0%
74.0%
70.3%
70.9%

2
61.5%
62.4%
65.6%
53.1%
67.3%
67.0%
65.9%
66.5%

3
57.8%
52.1%
57.8%
57.6%
53.9%
61.0%
53.3%

4
38.9%
43.8%
40.6%
33.3%
38.4%
40.7%

5
43.4%
39.0%
41.1%
38.9%
41.0%

6
42.0%
41.2%
40.3%
40.0%

7
38.9%
38.7%
36.9%

63.7%

56.2%

39.7%

39.9%

39.5%

38.6%

Year
2003
2004
2005
2006
2007
2008
2009

1
19.9%
17.6%
20.4%
20.4%
19.8%
16.4%
17.9%
2
17.1%
18.0%
17.9%
19.0%
17.6%
18.4%
19.2%

3
16.4%
17.4%
17.0%
18.0%
18.0%
16.9%
17.4%

4
13.9%
14.1%
14.5%
12.7%
13.0%
13.4%

5
12.9%
14.5%
13.2%
14.4%
13.6%

6
13.9%
13.7%
13.2%
14.2%

7
13.6%
13.9%
15.1%

8
1.0%
0.0%

8
36.6%
40.2%

8
11.7%
13.0%
Advertising

2010
2011
Average

20.7%
20.9%
19.3%

19.4%
18.3%

17.3%

13.6%

13.6%

13.5%

13.4%

Year
2003
2004
2005
2006
2007
2008
2009
2010
2011
Average

1
9.9%
10.3%
10.9%
10.3%
10.2%
10.2%
11.0%
11.7%
10.7%
10.6%

2
8.9%
8.2%
8.9%
8.4%
9.0%
9.6%
9.1%
8.9%

3
7.6%
8.3%
8.0%
8.3%
8.1%
8.3%
8.6%

4
7.1%
7.4%
7.6%
6.8%
6.9%
7.3%

5
6.7%
8.0%
7.0%
6.8%
7.1%

6
7.7%
7.7%
6.7%
6.6%

7
6.9%
7.2%
7.3%

8.9%

8.2%

7.2%

8
6.8%
7.2%
9
-0.6%

9
40.0%

9
13.1%
9
7.6%
Exhibit 9: Forecasting Investment
Accounts Receivable

Inventory

Accounts Payable

Year
2003
2004
2005
2006
2007
2008
2009
2010
2011
Average

1
36.5%
34.4%
32.8%
32.6%
31.2%
32.9%
33.7%
31.8%
32.6%
32.4%

2
31.6%
32.5%
33.1%
31.2%
31.0%
34.0%
33.5%
33.7%

3
31.9%
33.2%
31.8%
33.8%
32.3%
30.5%
33.6%

4
32.1%
33.5%
29.7%
33.8%
31.3%
31.4%

5
32.2%
34.2%
31.3%
32.0%
32.0%

6
30.9%
34.6%
31.7%
33.8%

7
31.0%
32.5%
32.4%

8
29.7%
31.9%

Year
2003
2004
2005
2006
2007
2008
2009
2010
2011
Average

1
45.9%
43.4%
47.2%
45.6%
46.7%
50.1%
47.8%
45.5%
45.3%
47.6%

2
47.2%
48.3%
48.3%
58.0%
42.2%
49.4%
53.4%
50.7%

3
44.0%
54.5%
40.6%
48.8%
53.0%
48.6%
46.7%

4
50.4%
46.4%
46.8%
59.3%
48.1%
45.9%

5
42.4%
47.3%
43.4%
50.4%
45.5%

6
42.4%
45.6%
44.9%
49.2%

7
44.3%
48.5%
48.2%

8
50.3%
47.3%

Year
2003
2004
2005
2006
2007
2008
2009

1
16.1%
16.1%
15.4%
16.1%
15.5%
17.0%
16.8%

2
17.2%
16.9%
16.1%
19.8%
16.8%
15.8%
15.8%

3
14.8%
18.0%
15.2%
16.0%
16.5%
15.0%
17.3%

4
16.9%
15.6%
16.2%
19.1%
17.3%
15.6%

5
14.6%
17.0%
16.2%
16.3%
15.2%

6
15.2%
16.3%
15.9%
16.7%

7
15.7%
16.8%
17.3%

8
17.2%
15.9%
Accrued Expenses

Construction costs

2010
2011
Average

15.6%
16.4%
16.3%

16.4%

Year
2003
2004
2005
2006
2007
2008
2009
2010
2011
Average

1
4.7%
5.1%
4.6%
4.6%
4.6%
5.1%
5.2%
4.5%
4.4%
4.8%

2
5.1%
5.1%
4.7%
4.7%
5.0%
5.0%
4.8%
4.7%

2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015

Nominal
20.8
22.3
24.5
28.2
30.6
29.8
27.2
25.6
25.9
26.4
26.9
27.4
27.9

Real
25.9
26.8
28.6
32.0
33.5
32.6
28.9
26.8
26.4
26.4
26.4
26.4
26.4

Nominal

Real

3
4.9%
4.9%
4.8%
4.8%
4.6%
4.8%
4.7%

4
4.7%
4.9%
4.4%
5.0%
4.8%
4.9%

5
4.9%
4.7%
5.2%
4.7%
4.8%

6
4.5%
4.7%
5.0%
4.7%

7
4.6%
4.8%
4.6%

8
5.2%
4.9%
Refresh cost

2003
2004
Average

90.6%
79.6%

74.0%
66.0%
70.0%
9
31.5%

9
42.5%

9
15.3%
9
4.7%
Exhibit 10: Forecasting Parameters
1
Sales growth
CGS (% sales)
SGA (% sales, excluding dep & advertising)
Advertising (% sales)
Accounts Receivable (% sales)
Inventory (% next year's CGS)
Accounts Payable (% next year's CGS)
Accrued expenses (next year's SGA adv)
Depreciation (years)
Refresh cost
Corporate tax rate
Corporate expenses
Discount rate
Long-term growth rate
Shares outstanding (K)

70.9%
19.3%
10.6%
32.4%
47.6%
16.3%
4.8%
5
70.0%
40.0%
5.0%
12.1%
3.5%
9,945

2
70.2%
63.7%
18.3%
8.9%

3
33.5%
56.2%
17.3%
8.2%

4
22.9%
39.7%
13.6%
7.2%

5
9.7%
39.7%
13.6%
7.2%

6
1.5%
39.7%
13.6%
7.2%

7
0.3%
39.7%
13.6%
7.2%
Teuer Furniture Pro Forma Income Statement
Sales
CGS
SGA (exc adv & dep)
Advertising
Depreciation
Lease (stores)
Corp Expense (inc lease/adv)
Tax calculation
Tax loss carry forwards
Taxes
Net income
Parameters:
Corporate tax rate
Corporate expenses

2012
148,218
-61,955
-21,253
-10,744
-1,450
-9,320
-7,411
-14,434
0
-14,434
21,651

40%
5%

2013
165,028
69,809
23,296
12,238
1,084
10,719
8,251

2014
181,941
76,952
25,691
13,464
1,373
11,915
9,097

2015
199,623
83,512
28,136
15,061
1,959
12,724
9,981
2016
217,575
87,805
30,421
16,596
2,631
13,497
10,879

2017
231,545
91,925
32,112
17,674
2,559
13,825
11,577

2018
242,363
96,219
33,277
18,247
2,178
14,267
12,118

2019
251,183
99,721
34,161
18,882
1,828
14,516
12,559

15,852
23,778

17,380
26,069

19,300
28,950

22,298
33,447

24,749
37,124

26,423
39,634

27,807
41,710
Teuer Furniture Pro Forma Balance Sheet
2012

2013

2014

2015

2016

2017

2018

48,200
33,343
81,543
0
3,920
85,463

53,469
35,407
88,876
17,226
5,203
111,305

61,843
38,754
100,597
29,982
7,155
137,734

67,657
41,116
108,772
49,198
9,310
167,281

73,555
43,756
117,311
76,905
7,440
201,656

78,158
45,800
123,959
110,055
5,203
239,216

81,736
47,467
129,203
146,624
3,641
279,469

11,364
1,682
13,046
0
72,417
85,463

12,247
2,862
15,109
0
96,196
111,305

12,772
2,698
15,469
0
122,265
137,734

13,449
2,617
16,066
0
151,215
167,281

14,462
2,531
16,994
0
184,662
201,656

15,085
2,345
17,430
0
221,786
239,216

15,632
2,417
18,049
0
261,420
279,469

Assets
Accounts Receivable
Inventory
Total Current Assets
Cash (balance)
PPE
Total Assets
Liabilities and Equity
Accounts Payable
Accrued Expenses
Total Current Liabilities
Debt
Equity
Total Liabilities and Equity
Balance sheet check (A=L+E)
Teuer Furniture Pro Forma Cash Flow Assets
Sales
- Costs
- Taxes
Net income
- Capital expenditure
+ Depreciation
- Increase in NWC
Cash flow assets

PV
Terminal value
Asset value
Share value
Parameters:
Asset discount rate
Long-term growth rate
Shareholders (#)
Shares outstanding (K)

2012
148,218
-112,132
-14,434
21,651
-2,229
1,450
-8,365
12,508
1
12,508.10
₹ 328,148.97
₹ 440,109.09
328,149
33.00

12.1%
3.5%
187
9,945

2013
165,028
-125,398
-15,852
23,778
-2,367
1,084
-5,269
17,226
0.89
15,367.05

2014
181,941
-138,492
-17,380
26,069
-3,325
1,373
-11,361
12,756
0.80
10,150.53

2015
199,623
-151,373
-19,300
28,950
-4,114
1,959
-7,579
19,216
0.71
13,641.07

2016
217,575
-161,829
-22,298
33,447
-761
2,631
-7,610
27,707
0.63
17,545.66

2017
231,545
-169,672
-24,749
37,124
-322
2,559
-6,212
33,149
0.56
18,726.10
2018
242,363
-176,306
-26,423
39,634
-616
2,178
-4,626
36,569
0.50
240,210.5

2012
TCA
81,543
TCL
13,046
WC
68,497
Increase in NWC

2013
88,876
15,109
73,766
5,269

2014
100,597
15,469
85,128
11,361

2015
108,772
16,066
92,707
7,579

2016
117,311
16,994
100,317
7,610

2017
123,959
17,430
106,528
6,212

2018
129,203
18,049
111,154
4,626