Case 3 Lady M Confections- A Complete Guide / Case 3 Lady M Confections- A Complete Guide: Latest

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Zhongyuan Wu

ACCTG 855

Case Assignment 3

The valuation and Financing of Lady M Confections

Summary

 Lady M confections had featured in Oprah magazine twice in one year. Many
celebrities
 Need to expand the brand to Asia and Middle East.
 Offer =$10M line of credit to be exchange of equity stake in the company.
 Offer = to include exclusive franchising rights in china for the investor.
 Lady M considers opening a new boutique in the new WTC
 Annual rent for the new location is $310,600
 Have to make decision between the WTC location or the Chinese investor’s offer
 Considering the break even analysis, profit and all as would relate to the benefit and
the growth of the company.
 The need to break even in one year

Consider 1

Opening a new boutique at WTC in New York

Lady M needs to break even at least.

For year 1 Amounts in ($)
Rent (Increased 3%) 310,600
Utilities (Increased 3%) 38,644
Labor cost (Increased 3%) 594,750
CGS (50% of gross sales) 943,994
Total (Gross sales) $1,887,998
Price per cake $80
Cakes sold per year 23,5999.9 =23,600
Average Cakes per day 64.65 =65 cakes


Net income = gross sales – Total expenditure

Total Expenditure = rent+ Utilities+ Labor+ COGS

COGS = 50% gross sales