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WILMINGTON UNIVERSITY

COURSE TITLE: Advanced Financial Analysis

COURSE NUMBER: MBA 7294

FACULTY MEMBER: John Bish

Week #1 Case Study – Panera Bread Company

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.

Case Study Analysis Papers grading rubric

Grading CriteriaMaximum Points
Completed Panera Bread Company’s 2007 forecast financial statements.5
Describe three possible financial forecasting processes. Discuss the benefits and limitations of each method. Describe why you chose the approach you used in this case study.10
Develop a 5 year Financial Forecast (Balance Sheet and Income Statement)25
Provide an assessment of the earning quality of Panera Bread in 2012 of the projected financial statements.15
Determine the amount of Free Cash Flow in 2012; discuss the importance of Free Cash Flow and its relationship to overall accounting earnings.15
Analysis of financial ratios; including baseline ratios, their change of the forecast periods, and the overall performance in 2012.10
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.10
Proper spelling, punctuation, and APA Formatting10
Total100