value line case study

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Case study: Value line publishing
According to the case, Lowe’s management said that the growth rate of next two years would be 18% to 19%. So I prefer to use this rate as the growth rate of the first two years. The growth rate of the first two years would be 18.5%. The growth rate from 2004 to 2006 is estimated by the number of new stores, sq. footage and the historical sales. The following exhibit will show this result.

1997
1998
1999
2000
2001

Number of stores
477
520
576
650
744

Sq. footage (M)
39.86
47.795
56.981
67.774
80.702

footage/stores
8.36%
9.19%
9.89%
10.43%
10.85%
9.70% sales 10136.89
12244.88
15905.6
18778.56
22111.11

sales/footage
254.3123
256.1959
279.1386
277.0762
273.9846
…show more content…
37.5%
37.5%
37.5%
37.5%

Cash & ST Inv/Sales
2.8%
3.5%
3.0%
3.1%
3.2%

Receivable turnover
150.00
155.00
152.00
155.00
160.00

Inventory turnover
4.30
4.30
4.30
4.30
4.30

P&E Turnover
2.50
2.45
2.48
2.40
2.30

Payables/COGS
11.8%
11.8%
11.8%
11.8%
11.8%

Other curr liab/net earnings
0.85
0.87
0.90
0.88
0.80

Forecast

Net sales
26202
31049
36104
41635
47668

Cost of sales
18507
21752
25086
28689
32572

Gross profit
7695
9297
11018
12945
15095

Cash operating expenses
4743
5651
6679
7619
8866

Depreciation & amortization
576
776
866
958
1096

EBIT
2376
2870
3472
4369
5133

NOPAT
1485
1794
2170
2730
3208

Cash and ST investments
733.6466
1086.714
1083.112
1290.68
1525.367

Accounts receivable
174.6778
200.3159
237.5246
268.6118
297.9233

Merchandise inventory
4303.906
5058.61
5833.873
6671.948
7574.972

Other current assets
346
402
458
514
570
56 Total current assets
5558.23
6747.64
7612.51
8745.24
9968.262

Accounts payable
2183.802
2566.739
2960.107
3385.347
3843.541

Accrued salaries and wages
257
293
329
365
401
36
Other current liabilities
1262.212
1560.46
1953.228
2402.776
2566.396

Current liabilities
3703.014
4420.199
5242.335
6153.122
6810.936

Working capital
1855.216
2327.441
2370.175
2592.118
3157.326

Net property and equipment
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