Case Study Questions:
1. Complete the financing portion of Panera Bread Company’s 2007 forecast financial statements
a. Include a chart of your financial assumptions.
2. Develop a 5 year Financial Forecast (both Balance Sheet and Income Statement)
3. Describe three possible financial forecasting processes. Discuss the benefits and limitations of each three methods. Describe why you chose the approach you used in this case study.
4. Provide an assessment of the earning quality of Panera Bread in Year 5 of the projected financial statements.
5. Determine the amount of Free Cash Flow Panera has in Year 5 of the projected financial statements. Discuss the importance of Free Cash Flow, and it’s relationship to overall accounting earnings.
6. Develop a table of relevant financial ratios for 2007 and Forecast Year 5; discuss the ratios, their change of the forecast period, and the overall performance of Panera Bread in Forecast Year 5.
7. Given the need for external sources of capital, compare and contrast the advantages and disadvantages of external equity, a long-term note payable, and a short-term line of credit.
Case Study Assumptions:
1. A 5-year financial forecast worksheet has been provided to you on Blackboard.
2. Assume all borrowing are a type of debt, no additional equity will be utilized to raise capital
3. The share repurchase program DOES occur in 2008; and interest expense is equal to 6% of outstanding debt
4. Sales growth is 25% for the first two years; then 5% thereafter.