Location: Boise, ID
The attached spreadsheet is a forecast that we prepared for a floral shop called Johnson Floral near Boise, ID. It is currently listed for sale at $75,000, which is lower than when we originally began the projections. We did a projection of 10 years into the future of how we believe the company will perform in the coming years based on our potential market projections. We projected the balance sheet for ten years as well as the income statement. We also computed the cash flows of the company based on different market outcomes (good, medium, and bad).
In order to create our projections, we did market analysis as well as used census data to configure the potential model for the growth of the company during the next ten years. The WACC (Weighted Average Cost of Capital) came out to be 5.66%, which is just the required rate of return for any investment in the company. Our IRR (Internal Rate of Return) was 7.27%. This is the rate of return that the company will actually experience. This shows that the company is profitable because the rate of return is higher than the required return.
While looking at the spreadsheet provided, you will see that buying this company would be a great investment due to it’s great profitability potential.