The following spreadsheet is a model that helps to analyze the potential purchase of LA Fitness. The current listing price for the sale of LA Fitness is $10,000,000. Our model includes a forecast of the income statement and balance sheet for the next ten years. Because it is a pro forma sheet, we have made assumptions about the future growth and expenses of the company. Through these assumptions, we estimated the future cash flows for an individual that is considering purchasing this company.
This model also includes a section that shows adjustments for both good and bad scenarios of future cash flows. Through our analysis, we decided that the asking price of $10,000,000 is too much for what LA Fitness can potentially produce in revenue and net income each year. If we were to purchase this company, we feel that a purchase price of $8,100,000 is more reasonable. If an individual was able to purchase at this price, it would make it a good investment.