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Hot Cakes Molten Chocolate Cakery crafts organic, classic American comfort desserts and other original and innovative confections. They were founded in 2008 by Autumn Martin with the dessert that gave them their name: Take-n-Bake Molten Chocolate Cake in a Mason Jar.
We have prepared a five-year forecast for the company’s income statement and balance sheet, as well as their weighted-average cost of capital (WACC) and their free cash flows with internal rate of return.
The forecast relies on the following assumptions:
- The companies we chose to compare betas with were the Rocky Mountain Chocolate Factory, Hershey’s, and the United Natural Foods. Even though those companies have various lines of operation, the main focus of each of the companies was the most comparable or similar to Hot Cakes Molten Chocolate Cakery. The average of those companies’ betas was used to calculate WACC.
- The interest, T-Bill, and S&P 500 rates were taken from the most recent historical data available online.
- These companies were chosen because they are all in the food industry. There weren’t any other public companies that had similar products.
In conclusion, we have found that, with proper funding and if Hot Cakes is able to keep up with industry averages, they have a great chance of success and growth. They are definitely a company to be watched.