Crocs Case Study Essay

2. What is the company 's rate of net income growth in 2004,2005, and 2006? Is projected net income growing faster or slower than projected sales? After computing these values, take a hard look at the 2004 income statement data to see if you want to make any adjustments.

As a member of management Clive Jenkins is responsible for boosting employee morale to ensure that company goals are met

Crocs Inc. is a U.S based shoe designer, manufacturer and retailer. It was founded in 2002 by three friends - Lyndon “Duke” Hanson, Scott Seamans and George Boedecker. Crocs shoes are manufactured from “Croslite”. They are comfortable & light weight, odour resistant, do not skid, easy to wash and do not mark surfaces. Owing to the properties of the resin, Croslite, the shoes could be manufactured in any colour. The company, however, chose bold colours.

EBITDA - Earnings before interest, taxes, depreciation and amortization is an indicator of a company's financial performance which is calculated in the following manner: ("EBITDA - Earnings Before Interest, Taxes, Depreciation and Amortization Definition | Investopedia," n.d.)

With revenue from Crocs shoe sales reaching to $680 million in 2007, it is clear that the company has developed a successful strategy. Not all of the success can be contributed to the design of the product. Although their products were in high demand, there are more underlying factors that have paved the way for Crocs to be competitive in the shoe market. Crocs’ supply chain design and use of vertical integration revolutionized speed and quality of order fulfillment.

Scenario: John is a 4 year-old boy who was admitted for chemotherapy following diagnosis of acute lymphoblastic leukemia (ALL).  He had a white blood cell count of 250,000.  Clinical presentation included loss of appetite, easily bruised, gum bleeding, and fatigue.  Physical examination revealed marked splenomegaly, pale skin color, temperature of 102°F, and upper abdomen tenderness along with nonspecific arthralgia.

These number will be used for predicting future financial statements later in this case study.

The change in the growth assumption has significant impact on the stock price. Under the high estimate of growth rate 236%, the new price per share is $107.56. Under the low estimate of growth rate 35%, the new price per share is $2.36.

As the economic condition and consumer sentiment improves, JBH might be able to fully capitalize and book unexpectedly strong growth in the next several years. On the other hand, if expected economic recovery turned out to be a disappointment, or management decided to abruptly halt the company’s expansion, the assumed growth rate might be too optimistic.

The case study focuses on an employee, Paul Keller, who is being affected by a number of factors. His job performance is hindered by constraints such as his work environment, his home environment, stressors, mood, and the management style of his superior. The case study demonstrates how his job performance is affected and what the consequences could be as a result of his poor job performance and lack of concentration.

The next step was to calculate the free cash flows for the eleven-year period. In order to do so, we used to following formula: FCF = EBIT(1-tax) + depreciation - change in NWC – CapEx. From here, we used to WACC of 13.89% previously calculated, in order to find the present value of each FCF.

The valuation process, in this case, requires us to estimate the short-run non-constant growth rate and predict future dividends. Then, we must estimate a constant long-term growth rate at which the firm is expected to grow. Generally, we assume that after a certain point of time, all firms begin to grow at a rather constant rate. Of course, the difficulty in this framework is estimating the short-term growth rate, how long the short-term growth will hold, and the long-term growth rate.

The kids segment, which comprised 23% of revenues in 2015, is a natural and maintainable market for Crocs. Crocs’ comfort, easy-on, easy-off style, bright colors make them ideal for kids. Plus, their low price point and expansive size range make them ideal for parents on a budget with fast-growing children.

(Note: retained earnings information is irrelevant here) Part b. Total market value = debt + pref. equity + Common equity = 1,147,200 + 1,250,000 + 2,500,000 = $4,897,200

Since there are significant changes in the company for the last 3 years such as descending trend in car and truck market in 1991, sale of one of their core electronics business, terminated Volvo agreement etc.; the company thinks that their financial value (equity and debt ratios and weights) and accordingly cost of capital is changed. Also company has free cash (derived from the sales of electronics