Panera Bread

Case Brief: Panera Bread
With Panera Breads profit margins shrinkage due to increases in commodities costs, the company must, for the first time, consider development debt to finance further expansion. There are leash main(prenominal) questions that Panera get out need to address: whether the company should use short debt, long-term debt, or candor financing to continue maturement the company; whether or not the company should repurchase the $75 million of its own stock; and how the company should fund this repurchase. We will consider some of the advantages and disadvantages to each of these proposals using dimension and pecuniary statement analysis.
Before we can begin our analysis, we must flow on some preconditions. We model that revenue will wax at a put of 25% over the side by side(p) two years but will then slow down to a 5% growth rate thereafter. We also fill that CGS will be 91.6% of sales (this ratio has remained roughly stable for the quintette years for which we have data). We make the assumption that the four items that sub-divide CGS will remain at unbroken ratios in relation to sales. We expect the interest rate on debt to remain at 6% for the length of the projections as do we expect our income tax rate to remain unchanged.



As the ratio of current assets to sales has been decreasing over the past louvre years, we will project the ratio to fall to 13.5% in 2008 and cop steady for the period of the projections. The companys growth rate in PP&E has been decreasing by 4 points for each of past five years, so we will assume that that trend will continue. Current liabilities to sales will be set at 12.7%, which is the average of ratio for the past five years. We forecast the equity using the equity in the former year plus the net income in that year. In addition, the tierce types of external sources of capital are each presented in three excel forms. As the repurchase of 75 million of equity will happen in year 2008, we add 75 million of current liabilities, debt or equity...If you want to get a full essay, order it on our website: Orderessay



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