Valuation Model for a Clothing Franchise

Clothing Franchise Valuation Model

The management of your company has asked you to make a 5 years Financial Model (in excel) for setting up a franchise of a well-renowned clothing brand. The objective is to analyze the feasibility to set up this business. The model contains an executive summary, revenue computation of each inventory item, Income Statement, Balance Sheet, Cashflow Statement, Feasibility study, and Ratio analysis. The assumptions for price of goods, inventory items, number of products and SDGA are provided. These are flexible assumptions and one can change them as per their requirement.

The model template includes:

– Executive Summary section with charts and key financials
– Key assumptions sheet specific
– Yearly financial projections (Income Statement, Balance Sheet and Cash Flow Statement)
– Simple debt schedule
– Fixed asset depreciation schedule
– Forecasted financial ratios such as Debt/EBITDA, current ratio, quick ratio, ROE, etc.
– Projected Free Cash Flows to Firm which are used to calculate the internal rate of returns (Project IRR) and the Net Present Value (NPV)
– Payback period based on Free Cash Flows to Firm (FCFF)
– Calculation of the Equity IRR by using the levered cash flows from the shareholder’s point of view
– Reader and print-friendly layout including charts and graphs

The IRR Model provides the financial model to evaluate the IRRs and NPV of a greenfield project.

The model is based on a set of changeable assumptions for revenue growth, inflation, cost growths, Working capital growth. It follows a strict bottom-up approach: starting from revenues from individual clothing items, COGS, Income Statement, Balance Sheet, Cash flow statements are prepared.

Feasibility template is used to do NPV, IRR and Payback period analysis. The model was developed for a job interview so it has a strict professional outlook with easily changeable assumptions, formulas, and formatting.

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