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Zhongyuan Wu
ACCTG 855
Case Assignment 3
The valuation and Financing of Lady M Confections
Summary
Lady M confections had featured in Oprah magazine twice in one year. Many
celebrities
Need to expand the brand to Asia and Middle East.
Offer =$10M line of credit to be exchange of equity stake in the company.
Offer = to include exclusive franchising rights in china for the investor.
Lady M considers opening a new boutique in the new WTC
Annual rent for the new location is $310,600
Have to make decision between the WTC location or the Chinese investor’s offer
Considering the break even analysis, profit and all as would relate to the benefit and
the growth of the company.
The need to break even in one year
Consider 1
Opening a new boutique at WTC in New York
Lady M needs to break even at least.
For year 1 Amounts in ($)
Rent (Increased 3%) 310,600
Utilities (Increased 3%) 38,644
Labor cost (Increased 3%) 594,750
CGS (50% of gross sales) 943,994
Total (Gross sales) $1,887,998
Price per cake $80
Cakes sold per year 23,5999.9 =23,600
Average Cakes per day 64.65 =65 cakes
Net income = gross sales – Total expenditure
Total Expenditure = rent+ Utilities+ Labor+ COGS
COGS = 50% gross sales
Zhongyuan Wu
ACCTG 855
Case Assignment 3
The valuation and Financing of Lady M Confections
Summary
Lady M confections had featured in Oprah magazine twice in one year. Many
celebrities
Need to expand the brand to Asia and Middle East.
Offer =$10M line of credit to be exchange of equity stake in the company.
Offer = to include exclusive franchising rights in china for the investor.
Lady M considers opening a new boutique in the new WTC
Annual rent for the new location is $310,600
Have to make decision between the WTC location or the Chinese investor’s offer
Considering the break even analysis, profit and all as would relate to the benefit and
the growth of the company.
The need to break even in one year
Consider 1
Opening a new boutique at WTC in New York
Lady M needs to break even at least.
For year 1 Amounts in ($)
Rent (Increased 3%) 310,600
Utilities (Increased 3%) 38,644
Labor cost (Increased 3%) 594,750
CGS (50% of gross sales) 943,994
Total (Gross sales) $1,887,998
Price per cake $80
Cakes sold per year 23,5999.9 =23,600
Average Cakes per day 64.65 =65 cakes
Net income = gross sales – Total expenditure
Total Expenditure = rent+ Utilities+ Labor+ COGS
COGS = 50% gross sales
