Magic Suds

Location: Rexburg, ID

Description:

In this analysis of Magic Suds laundromat in Rexburg, ID, we have made a pro forma income statement and balance sheet. We made our forecasts using assumptions taken from comparable businesses, locations, and economic conditions. Through considerable research, we have been able to forecast the financial possibilities of this company from purchase to a potential sale of the company eight years later. We have also been able to forecast certain benchmarks that are needed in order to make the purchase of this company fiscally successful. We have calculated the break-even point in total sales and units, the weighted average cost of capital, the internal rate of return, and the future free cash flows from the operations of this company.

Magic Suds is listed for sale for $600,000. We calculated a WACC for this company of 7.62%. After we calculated the IRR from the cash flows from operations, we found that the return of 8.67% from running this company exceeds the cost of capital of 7.62%. These rates show that this business would be a prudent investment for anyone looking to open their own business, and generate steady cash flows under a very simple business plan.  

It is also important to note the growing economy and expanding population of this particular location. With Brigham Young University-Idaho at the center of this town, the influx of the young student population makes Rexburg an ideal choice for this type of business. We assume that there will be strong demand for this type of service in Rexburg well into the future. 

In our attached spreadsheet, it is possible to change any of our assumptions and inputs and be able to see the cascading results throughout the rest of the spreadsheet. This will allow interested parties to use our spreadsheet as a tool to try different scenarios, and see if this company would be a good investment. While the assumptions we have made are based on thorough research, we encourage anyone to use this spreadsheet and apply the numbers that they feel are appropriate.

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