Location: Santa Monica, CA
Edible Arrangements is a company that sells fruit arrangements and gifts for special occasions such as birthdays, weddings, and holidays. The attached spreadsheet is for the Edible Arrangements located in Santa Monica, CA and is currently listed for sale at $415,000. The model includes an income statement and balance sheet for the company based on the market assumption in the area and an analysis of the cost of capital and internal rate of return forecasted for the company. The model allows key variables to be changed and includes citations for the assumed values.
In our model with the input values chosen, the company would have a weighted average cost of capital equal to 8.0%, and an internal rate of return of 8.9%. This rate of return was calculated from an initial investment of $558,762, which includes the assets and working capital of the company.
We believe the listed sales price for the company is realistic for a number of reasons. The company’s well-established reputation in this niche market nationwide combined with a relatively low initial investment cost and an internal rate of return significantly higher than the cost of capital support this conclusion.