You are working on your second project as an equity research intern at a bulge investment bank. Your focus is in retail
Posted: Sun Jul 03, 2022 6:43 am
You are working on your second project as an equity researchintern at a bulge investment bank. Your focus is in retail space,especially in the health and fitness sector. Currently, you aregathering information on a fast-growing chain fitness companycalled LuluYoga. You are interested in calculating the free cashflow of the firm.
LuluYoga offers yoga classes in several major cities in theUnited States. Two major revenue resources are selling workout gearand membership passes for class access.
Assume at the beginning of year 2016, LuluYoga has zeroinventory.
In year 2016, LuluYoga purchased 10,000 yoga mats at a price of$10 each. The company sells 6,000 mats at a price of $15 in year2016 and sells the remaining at a price of $20 in year 2017.
In year 2016, LuluYoga sells 1,000 membership passes for $2,000each. 80% of the classes purchased were used in 2016 and the restare used in 2017.The yoga master’s compensation to teach classesare $300K in year 2016 and $200K in year 2017.
LuluYoga pays corporate tax of 35%.
Q1. What is LuluYoga’s net operating profit in 2016 ?
Q2. What is LuluYoga’s net operating profit in 2017?
Q3. What is the change of inventory from 2015 to 2016, and from2016 to 2017?
Q4. What is the deferred revenue in 2016?
Q5. What is the change of NOWC in year 2016?
Q6. What is the FCF of LuluYoga in year 2016?
Q7. What is the FCF of LuluYoga in year 2017
LuluYoga offers yoga classes in several major cities in theUnited States. Two major revenue resources are selling workout gearand membership passes for class access.
Assume at the beginning of year 2016, LuluYoga has zeroinventory.
In year 2016, LuluYoga purchased 10,000 yoga mats at a price of$10 each. The company sells 6,000 mats at a price of $15 in year2016 and sells the remaining at a price of $20 in year 2017.
In year 2016, LuluYoga sells 1,000 membership passes for $2,000each. 80% of the classes purchased were used in 2016 and the restare used in 2017.The yoga master’s compensation to teach classesare $300K in year 2016 and $200K in year 2017.
LuluYoga pays corporate tax of 35%.
Q1. What is LuluYoga’s net operating profit in 2016 ?
Q2. What is LuluYoga’s net operating profit in 2017?
Q3. What is the change of inventory from 2015 to 2016, and from2016 to 2017?
Q4. What is the deferred revenue in 2016?
Q5. What is the change of NOWC in year 2016?
Q6. What is the FCF of LuluYoga in year 2016?
Q7. What is the FCF of LuluYoga in year 2017