These spreadsheet exhibits relate to the case Teuer Furniture (A): Discounted Cash Flow Valuation, Case

#KEL778.
2014 by the Kellogg School of Management at Northwestern University. This case was prepared by Professor
Mitchell A. Petersen. Teuer Furniture is a fictional company whose profile was created based on data from real
industry leaders. Cases are developed solely as the basis for class discussion. Cases are not intended to serve
as endorsements, sources of primary data, or illustrations of effective or ineffective management. To order
copies or request permission to reproduce materials, call 800-545-7685 (or 617-783-7600 outside the United
States or Canada) or e-mail custserv@hbsp.harvard.edu. No part of this publication may be reproduced, stored
in a retrieval system, used in a spreadsheet, or transmitted in any form or by any meanselectronic,
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w Valuation, Case

prepared by Professor
ased on data from real
e not intended to serve
agement. To order
0 outside the United
be reproduced, stored
electronic,
ase Publishing.

Exhibit 1: Teuer Furnitures Showrooms and Square Footage

Stores
Opened
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015

Total
Stores
1
3
4
5
6
2
1
2
2
3
2
2
2

1
4
8
13
19
21
22
24
26
29
31
33
35

SQ FT
Opened
17,200
17,600
18,500
21,100
22,100
15,500
14,500
14,700
15,400
16,300
16,000
16,000
15,000

Total
SQ FT
17,200
70,000
144,000
249,500
382,100
413,100
427,600
457,000
487,800
536,700
568,700
600,700
630,700

40
35
30
25
20
15
10
5
0
2003

200
N

40

700,000

35

600,000

30

500,000

25

400,000

20

300,000

15

200,000

10

100,000

5
0
2003

2005
2007
2009
2011
Number of Showrooms
Total Square Feet

2013

0
2015

Exhibit 2: Economic Indicators: GDP and Furniture Sales Growth

CPI index
Inflation (CPI)
GDP (T$)
GDP growth
Furniture sales ($B)
Furniture sales growth

2002
180.9
10,642
94.44

2003
184.3
1.9%
11,142
4.7%
96.7
2.4%

2004
190.3
3.3%
11,853
6.4%
103.8
7.3%

2005
196.8
3.4%
12,623
6.5%
109.1
5.2%

2006
201.8
2.5%
13,377
6.0%
112.8
3.4%

2007
210.0
4.1%
14,029
4.9%
111.1
-1.5%

2008
210.2
0.1%
14,292
1.9%
99.6
-10.4%

2009
215.9
2.7%
13,974
-2.2%
86.3
-13.4%

2010
219.2
1.5%
14,499
3.8%
87.3
1.2%

2011
225.7
3.0%
15,076
4.0%
90.1
3.2%

2012
229.6
1.7%
15,685
4.0%
93.1
3.4%

10.0%

5.0%

0.0%
2003

2005

2007

2009

2011

-5.0%

-10.0%

-15.0%

GDP Growth

Furniture Sales Growth

Inflation (CPI)

2013

2015

2017

2013
233.5
1.7%
16,238
3.5%
95.9
3.0%

2014
237.7
1.8%
17,049
5.0%
98.6
2.8%

2015
242.3
1.9%
18,012
5.6%
101.2
2.6%

2016
247.4
2.1%
19,021
5.6%
103.6
2.4%

2017
252.1
1.9%
20,078
5.6%
105.9
2.2%

2018
256.6
1.8%
21,101
5.1%
108.0
2.0%

2019
261.3
1.8%

110.2
2.0%

Exhibit 3: Teuer Furniture Income Statement

2003
Sales
Cost of goods sold
Selling, general and admin
Advertising
Depreciation
Lease
Corporate expense
Taxes
Net income
Parameters:
Corporate tax rate

40%

2004
2,057
-1,463
-410
-203
-72
-250
-185
0
-526

2005
10,415
-7,057
-1,812
-1,019
-307
-1,080
-729
0
-1,588

2006
26,701
-17,424
-4,958
-2,411
-669
-2,330
-1,602
0
-2,693

2007
51,540
-30,730
-9,230
-4,588
-1,264
-4,240
-3,092
0
-1,604

2008
79,191
-43,834
-13,576
-6,585
-2,075
-6,770
-4,751
0
1,600

2009
90,680
-47,290
-14,679
-7,532
-2,188
-7,380
-5,441
-543
5,626

2010
111,451
-49,068
-16,471
-8,367
-2,032
-7,712
-5,573
-8,892
13,337

2011
134,093
-55,487
-18,698
-9,545
-1,820
-8,450
-6,705
-13,356
20,033

2012
148,218
-61,955
-21,253
-10,744
-1,450
-9,320
-7,411
-14,434
21,651

Exhibit 4: Teuer Furniture Balance Sheet

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

0
671
671
358
1,029

751
3,151
3,902
1,461
5,364

3,479
8,216
11,695
2,969
14,663

8,675
15,125
23,800
5,270
29,070

16,946
20,908
37,853
8,065
45,918

25,272
21,715
46,987
6,914
53,900

29,059
24,868
53,927
5,119
59,046

36,625
26,808
63,433
3,839
67,272

42,421
29,216
71,637
3,142
74,779

48,200
33,343
81,543
3,920
85,463

236
29
265
0
764
1,029

1,158
145
1,303
0
4,061
5,364

2,781
358
3,139
0
11,525
14,663

5,119
658
5,777
0
23,293
29,070

7,228
958
8,186
0
37,732
45,918

7,767
1,055
8,822
0
45,079
53,900

8,277
1,203
9,480
0
49,565
59,046

9,133
1,359
10,493
0
56,779
67,272

9,986
1,519
11,505
0
63,274
74,779

11,364
1,682
13,046
0
72,417
85,463

Assets
Accounts Receivable
Inventory
Total Current Assets
PPE
Total Assets
Liabilities and Equity
Accounts Payable
Accrued Expenses
Total Current Liabilities
Debt
Equity
Total Liabilities and Equity
Balance sheet check

Exhibit 5: Teuer Furniture Income Statement for Individual Showrooms

2012

2013

2014

2015

2016

2017

2018

2019

10

11

12

13

14

15

16

Sales

2,057

3,754

5,224

6,148

6,341

5,503

5,636

5,871

6,034

CGS

1,463

2,309

3,018

2,394

2,753

2,311

2,194

2,150

2,416

SGA

410

640

857

856

815

765

767

687

791

203

334

399

434

422

423

391

401

457

10

11

12

13

14

15

10

11

12

13

14

10

11

12

13

10

11

12

10

11

10

2003

Avg Size
1

17,200

Advertising
Depreciation

2004

2005

2006

2007

2008

2009

2010

2011

72

72

72

72

72

65

250

250

250

250

250

250

302

302

302

Sales

6,661

11,907

15,158

16,488

15,446

16,187

17,279

17,869

CGS

4,748

7,428

7,894

7,216

6,031

6,675

6,691

7,176

SGA

Lease
2004

17,600

1,171

2,148

2,631

2,323

2,239

2,224

2,395

2,319

Advertising

685

971

1,266

1,213

1,235

1,241

1,245

1,287

Depreciation

235

235

235

235

235

830

830

830

830

830

830

1,003

1,003

Sales

9,570

16,651

19,785

20,951

22,847

24,451

24,499

CGS

6,978

10,917

11,430

8,499

9,387

9,857

9,042

SGA

1,953

2,977

3,371

3,039

3,021

3,228

3,693

1,041

1,488

1,587

1,598

1,605

1,645

1,793

Lease
2005

18,500

Advertising
Depreciation
Lease
2006

21,100

Sales

363

363

363

363

363

1,250

1,250

1,250

1,250

1,250

1,250

1,510

13,583

21,142

23,592

29,702

34,105

34,824

CGS

9,526

11,229

13,594

9,902

13,259

13,932

SGA

2,767

4,016

4,237

3,780

4,895

4,946

1,400

1,784

1,964

2,014

2,327

2,287

Advertising
Depreciation

594

594

594

594

594

1,910

1,910

1,910

1,910

1,910

1,910

Sales

15,435

22,001

30,466

39,628

43,541

CGS

11,205

14,801

16,422

15,232

17,856

SGA

3,050

3,878

5,471

5,166

5,917

1,578

1,986

2,458

2,748

3,109

812

812

812

812

812

2,530

2,530

2,530

2,530

2,530

Sales

3,187

5,176

7,244

9,257

CGS

2,053

3,467

4,421

3,764

SGA

Lease
2007

22,100

Advertising
Depreciation
Lease
2008

15,500

522

951

1,225

1,243

Advertising

326

499

598

675

Depreciation

185

185

185

610

610

610

Lease
2009

14,500

185
610

Sales

1,437

2,507

3,540

CGS

1,021

1,652

1,887

SGA

257

480

615

158

227

303

79

79

79

280

280

280

Advertising
Depreciation
Lease
2010

14,700

Sales

3,008

5,300

CGS

2,226

3,526

SGA

623

1,028

Advertising

353

473

Depreciation

150

150

Lease
2011

565
2

15,400

565
1

Sales

3,354

CGS

2,357

SGA

701

Advertising

358

Depreciation

160

Lease
2012

610
3

16,300

Sales

5,379

CGS
SGA
Advertising
Depreciation
Lease
2013

1,000
2

16,000

Sales

3,622

CGS
SGA
Advertising
Depreciation
Lease
2014

668
2

16,000

Sales

3,731

CGS
SGA
Advertising
Depreciation
Lease
2015

682
2

15,000

Sales

3,597

CGS
SGA
Advertising
Depreciation
Lease

Parameters:
Lease rate (2013)
Lease inflation

652

20.88
2.0%

Exhibit 6: Teuer Furniture Balance Sheet for Individual Showrooms

#
2003

Avg Size
1

17,200

Cap expenditure

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

10

11

12

13

14

15

10

11

12

13

14

10

11

12

13

10

11

12

10

11

10

358

Accts receivable

324
751

1,187

1,665

1,975

2,040

1,700

1,745

1,742

1,902

Inventory

671

1,090

1,330

1,206

1,167

980

972

1,082

1,027

1,090

Accts payable

236

396

448

405

403

350

345

370

369

390

Accr expenses

29

49

62

61

61

53

54

57

58

58

2004

17,600

Cap expenditure

1,175

Accts receivable

2,292

3,870

5,029

5,526

5,276

5,599

5,612

5,691

2,061

3,590

4,304

3,352

2,851

3,042

3,248

3,397

3,619

Accts payable

762

1,255

1,421

1,124

1,025

1,090

1,124

1,139

1,153

Accr expenses

95

158

193

173

162

162

175

177

179

Inventory

2005

18,500

Cap expenditure

1,814

Accts receivable

3,140

5,508

6,296

6,231

7,149

7,751

7,950

Inventory

3,296

5,271

4,640

3,975

4,075

4,427

4,354

5,114

Accts payable

1,078

1,760

1,742

1,381

1,523

1,572

1,565

1,631

Accr expenses

138

212

240

203

240

244

251

259

2006

21,100

Cap expenditure

2,971

Accts receivable

4,433

6,593

7,974

10,040

10,908

11,761

Inventory

4,344

6,518

6,635

5,870

6,689

6,854

6,348

Accts payable

1,533

2,227

2,181

1,889

2,165

2,325

2,377

Accr expenses

193

272

300

291

337

343

362

2007

22,100

Cap expenditure

4,058

Accts receivable

4,817

6,829

9,849

12,400

13,920

Inventory

5,232

6,246

8,710

7,320

8,121

9,022

Accts payable

1,732

2,480

2,712

2,631

2,712

2,919

Accr expenses

213

293

362

381

436

435

2008

15,500

Cap expenditure

924

Accts receivable

1,048

1,758

2,212

2,905

1,028

1,711

2,147

1,727

1,911

Accts payable

349

547

662

586

690

Accr expenses

43

72

88

94

101

Inventory

2009

8
936

14,500

Cap expenditure

394

Accts receivable

484

840

1,191

Inventory

488

882

881

823

Accts payable

171

261

327

281

Accr expenses

21

34

43

44

2010

14,700

Cap expenditure
Accts receivable

956

1,787

1,013

1,787

1,913

Accts payable

348

577

683

Accr expenses

44

71

91

Inventory

2011

15,400

Cap expenditure

798

Accts receivable

1,093

Inventory

1,067

1,795

Accts payable

387

623

Accr expenses

47

76

2012

752

16,300

Cap expenditure

0
1,293

Accts receivable
Inventory

1,708

Accts payable

617

Accr expenses

79

2013

16,000

Cap expenditure

860

Accts receivable
Inventory
Accts payable
Accr expenses
2014

16,000

Cap expenditure

876

Accts receivable
Inventory
Accts payable
Accr expenses
2015

2
Cap expenditure
Accts receivable
Inventory

15,000

837

Accts payable
Accr expenses

Exhibit 7: Teuer Furniture Cash Flow Assets

2003
Sales
- Costs
- Taxes
Net income
- Capital expenditure
+ Depreciation
- Increase in NWC
Cash flow to assets

0
-358
0
-406
-764

2004
2,057
-2,583
0
-526
-1,175
72
-2,193
-3,823

2005
10,415
-12,003
0
-1,588
-1,814
307
-5,957
-9,052

2006
26,701
-29,394
0
-2,693
-2,971
669
-9,467
-14,461

2007
51,540
-53,144
0
-1,604
-4,058
1,264
-11,645
-16,043

2008
79,191
-77,592
0
1,600
-924
2,075
-8,498
-5,747

2009
90,680
-84,510
-543
5,626
-394
2,188
-6,281
1,139

2010
111,451
-89,222
-8,892
13,337
-752
2,032
-8,494
6,124

2011
134,093
-100,704
-13,356
20,033
-1,122
1,820
-7,192
13,539

2012
148,218
-112,132
-14,434
21,651
-2,229
1,450
-8,365
12,508

Exhibit 8: Forecasting Sales Revenue and Costs

Sales growth

CGS

SGA

Year
2003
2004
2005
2006
2007
2008
2009
2010
2011
Average

2
73.6%
72.9%
76.6%
73.8%
64.5%
60.5%
69.0%
70.4%

3
34.6%
29.2%
32.6%
28.8%
36.8%
35.6%
36.6%

4
19.5%
21.4%
22.2%
24.4%
26.1%
23.6%

5
15.1%
8.1%
7.8%
11.3%
6.3%

6
0.2%
3.6%
3.7%
-1.3%

7
1.2%
3.4%
-3.1%

Year
2003
2004
2005
2006
2007
2008
2009
2010
2011
Average
Year
2003
2004
2005
2006
2007
2008
2009

8
1.0%
0.0%

70.2%

33.5%

22.9%

9.7%

1.5%

0.3%

1
71.1%
71.3%
72.9%
70.1%
72.6%
64.4%
71.0%
74.0%
70.3%
70.9%

2
61.5%
62.4%
65.6%
53.1%
67.3%
67.0%
65.9%
66.5%

3
57.8%
52.1%
57.8%
57.6%
53.9%
61.0%
53.3%

4
38.9%
43.8%
40.6%
33.3%
38.4%
40.7%

5
43.4%
39.0%
41.1%
38.9%
41.0%

6
42.0%
41.2%
40.3%
40.0%

7
38.9%
38.7%
40.2%

8
36.6%
40.2%

63.7%

56.2%

39.9%

1
19.9%
17.6%
20.4%
20.4%
19.8%
16.4%
17.9%

2
17.1%
18.0%
17.9%
19.0%
17.6%
18.4%
19.2%

3
16.4%
17.4%
17.0%
18.0%
18.0%
16.9%
17.4%

4
13.9%
14.1%
14.5%
12.7%
13.0%
13.4%

5
12.9%
14.5%
13.2%
14.4%
13.6%

6
13.9%
13.7%
13.2%
14.2%

7
13.6%
13.9%
15.1%

8
11.7%
13.0%

Advertising

2010
2011
Average

20.7%
20.9%
19.3%

19.4%
18.3%

17.3%

13.6%

Year
2003
2004
2005
2006
2007
2008
2009
2010
2011
Average

1
9.9%
10.3%
10.9%
10.3%
10.2%
10.2%
11.0%
11.7%
10.7%
10.6%

2
8.9%
8.2%
8.9%
8.4%
9.0%
9.6%
9.1%
8.9%

3
7.6%
8.3%
8.0%
8.3%
8.1%
8.3%
8.6%

4
7.1%
7.4%
7.6%
6.8%
6.9%
7.3%

8.9%

8.2%

7.2%

5
6.7%
8.0%
7.0%
6.8%
7.1%

6
7.7%
7.7%
6.7%
6.6%

7
6.9%
7.2%
7.3%

8
6.8%
7.2%

9
-0.6%

9
40.0%

9
13.1%

9
7.6%

Exhibit 9: Forecasting Investment

Accounts Receivable

Inventory

Accounts Payable

Year
2003
2004
2005
2006
2007
2008
2009
2010
2011
Average

1
36.5%
34.4%
32.8%
32.6%
31.2%
32.9%
33.7%
31.8%
32.6%
32.4%

2
31.6%
32.5%
33.1%
31.2%
31.0%
34.0%
33.5%
33.7%

3
31.9%
33.2%
31.8%
33.8%
32.3%
30.5%
33.6%

4
32.1%
33.5%
29.7%
33.8%
31.3%
31.4%

5
32.2%
34.2%
31.3%
32.0%
32.0%

6
30.9%
34.6%
31.7%
33.8%

7
31.0%
32.5%
32.4%

8
29.7%
31.9%

Year
2003
2004
2005
2006
2007
2008
2009
2010
2011
Average

1
45.9%
43.4%
47.2%
45.6%
46.7%
50.1%
47.8%
45.5%
45.3%
47.6%

2
47.2%
48.3%
48.3%
58.0%
42.2%
49.4%
53.4%
50.7%

3
44.0%
54.5%
40.6%
48.8%
53.0%
48.6%
46.7%

4
50.4%
46.4%
46.8%
59.3%
48.1%
45.9%

5
42.4%
47.3%
43.4%
50.4%
45.5%

6
42.4%
45.6%
44.9%
49.2%

7
44.3%
48.5%
48.2%

8
50.3%
47.3%

Year
2003
2004
2005
2006
2007
2008
2009

1
16.1%
16.1%
15.4%
16.1%
15.5%
17.0%
16.8%

2
17.2%
16.9%
16.1%
19.8%
16.8%
15.8%
15.8%

3
14.8%
18.0%
15.2%
16.0%
16.5%
15.0%
17.3%

4
16.9%
15.6%
16.2%
19.1%
17.3%
15.6%

5
14.6%
17.0%
16.2%
16.3%
15.2%

6
15.2%
16.3%
15.9%
16.7%

7
15.7%
16.8%
17.3%

8
17.2%
15.9%

Accrued Expenses

Construction costs

2010
2011
Average

15.6%
16.4%
16.3%

16.4%

Year
2003
2004
2005
2006
2007
2008
2009
2010
2011
Average

1
4.7%
5.1%
4.6%
4.6%
4.6%
5.1%
5.2%
4.5%
4.4%
4.8%

2
5.1%
5.1%
4.7%
4.7%
5.0%
5.0%
4.8%
4.7%

2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015

Nominal
20.8
22.3
24.5
28.2
30.6
29.8
27.2
25.6
25.9
26.4
26.9
27.4
27.9

Real
25.9
26.8
28.6
32.0
33.5
32.6
28.9
26.8
26.4
26.4
26.4
26.4
26.4

Nominal

Real

3
4.9%
4.9%
4.8%
4.8%
4.6%
4.8%
4.7%

4
4.7%
4.9%
4.4%
5.0%
4.8%
4.9%

5
4.9%
4.7%
5.2%
4.7%
4.8%

6
4.5%
4.7%
5.0%
4.7%

7
4.6%
4.8%
4.6%

8
5.2%
4.9%

Refresh cost

2003
2004
Average

90.6%
79.6%

74.0%
66.0%
70.0%

9
31.5%

9
42.5%

9
15.3%

9
4.7%

Exhibit 10: Forecasting Parameters

1
Sales growth
CGS (% sales)
SGA (% sales, excluding dep & advertising)
Advertising (% sales)
Accounts Receivable (% sales)
Inventory (% next year's CGS)
Accounts Payable (% next year's CGS)
Accrued expenses (next year's SGA adv)
Depreciation (years)
Refresh cost
Corporate tax rate
Corporate expenses
Discount rate
Long-term growth rate
Shares outstanding (K)

70.9%
19.3%
10.6%
32.4%
47.6%
16.3%
4.8%
5
70%
40.0%
5.0%
12.1%
3.5%
9,945

2
70.2%
63.7%
18.3%
8.9%

3
33.5%
56.2%
17.3%
8.2%

4
22.9%
39.9%
13.6%
7.2%

5
9.7%
39.9%
13.6%
7.2%

6
1.5%
39.9%
13.6%
7.2%

7
0.3%
39.9%
13.6%
7.2%

Teuer Furniture Pro Forma Income Statement

Sales
CGS
SGA (exc adv & dep)
Advertising
Depreciation
Lease (stores)
Corp Expense (inc lease/adv)
Taxes
Net income
Parameters:
Corporate tax rate
Corporate expenses

2012
148,218
-61,955
-21,253
-10,744
-1,450
-9,320
-7,411
-14,434
21,651

40%
5%

2013

2014

2015

2016

2017

2018

2019

Teuer Furniture Pro Forma Balance Sheet

2012

Assets
Accounts Receivable
Inventory
Total Current Assets
PPE
Total Assets
Liabilities and Equity
Accounts Payable
Accrued Expenses
Total Current Liabilities
Debt
Equity
Total Liabilities and Equity
Balance sheet check (A=L+E)

48,200
33,343
81,543
3,920
85,463

11,364
1,682
13,046
0
72,417
85,463

2013

2014

2015

2016

2017

2018

Teuer Furniture Pro Forma Cash Flow Assets

Sales
- Costs
- Taxes
Net income
- Capital expenditure
+ Depreciation
- Increase in NWC
Cash flow assets
Terminal value

2012
148,218
-112,132
-14,434
21,651
-2,229
1,450
-8,365
12,508

Asset value
Share value
Parameters:
Asset discount rate
Long-term growth rate
Shareholders (#)
Shares outstanding (K)

12.1%
3.5%
187
9,945

2013

2014

2015

2016

2017

2018