Location: Cumberland, MD
The attached spreadsheet model is for the Queen City Creamery that is located in Cumberland, MD. Our model includes an income statement and balance sheet for the restaurant. We developed some numbers that we thought would be reasonable for the business and for the revenues that they would receive in that area. We also included a good and bad case scenario for buying capital expenditures and a model for what would happen if this company went bankrupt.
Since the listed price was $330,000, this would not be a good investment. In each of the first six years of owning it, we project that we will have a net loss on our income statement. After that, we will start to have a positive net income, but not very much compared to the work that it will take. Our IRR and WACC are approximately 7%. Although we don’t have any extra bank loan, we still feel that this would be a risky business decision.
Another risk along with this business is the weather. The climate could contribute to the sales that we have. If there is bad weather, we could be shut down and have a huge decrease in sales. This would increase our net loss each year. The only way that we would want to buy this company is if we had more confidence in the number of daily sales.