Victory Burger

Location: Bay Area, CA

Company Website:

For Sale Website:

Description:

Victory Burger is a high quality burger joint in the Bay Area. It is a branch of Actual Cafe, which is right across the street. There will be initial funding of $315,000 to start the company. We created a fifteen year forecast with an Income Statement and Balance Sheet with key ratios. Some major assumptions are: annual sales growth would increase by 5%, the cost of goods sold would be 34% of sales, the interest rate on the initial loan today is around 9%, average days payable would be seven and average days inventory is five. The WACC assumptions for this company are: T-Bill rate of 5%, return of S&P 500 around 11%, McDonald’s beta is at .42 so we chose a beta of .84, since we have a little more risk to take on than McDonald’s. For the Internal Rate of Return, we did a free cash flow for the next fifteen years. We added equipment costs and then at the end of the fifteen years, we completely sold the company and liquidated all the assets. Overall, this is a great start-up company and it will provide a decent return in the near future.