Exhibit 5: Excerpt of Financial Assumptions

Revenue Projection: 2009

Total Capacity (000's) 80,000
Capacity Utilization 60.0%
Unit Volume 48,000
Selling Price Per Unit - Growing at 2.0% 1.77
Revenue 84,960

Production Costs:
Raw Materials Per Unit Growing at 1.0% 0.94
Manufacturing Overhead Growing at 3.0% 3,600
Maintenance Expense Growing at 3.0% 2,250

Salaried Labor Cost:

Managers 4
Average Annual Fully Loaded Cost 3.5% 160.0
Total Salaried Labor Cost 640.0

Hourly Labor Cost:

Average Fully Loaded Hourly Cost 3.5% 20.00
Hours Per Year 2,000
Cost Per Hourly Employee 40,000
Number of Hourly Workers 450
Total Hourly Labor Cost (000's) 18,000.0

Total Labor Cost 18,640.0

Selling, General & Administrative/Revenue 7.8%

Working Capital Assumptions (1):

Days Sales Outstanding 47.6x
Days Sales Inventory 37.6x
Days Payable Outstanding 34.2x

(1) Based on historical averages.

Hourly Labor Cost Per Unit 0.38

Units Per Total Labor Hours 0.05

ial Assumptions in Capital Request Form1 (Given)
2010 2011 2012 2013 2014 2015 2016 2017 2018
80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000
65.0% 70.0% 75.0% 80.0% 85.0% 85.0% 85.0% 85.0% 85.0%
52,000 56,000 60,000 64,000 68,000 68,000 68,000 68,000 68,000
1.81 1.84 1.88 1.92 1.95 1.99 2.03 2.07 2.12
93,881 103,124 112,700 122,618 132,887 135,545 138,256 141,021 143,841

0.95 0.96 0.97 0.98 0.99 1.00 1.01 1.02 1.03

3,708 3,819 3,934 4,052 4,173 4,299 4,428 4,560 4,697
2,318 2,387 2,459 2,532 2,608 2,687 2,767 2,850 2,936

4 6 6 6 6 6 6 6 6
165.6 171.4 177.4 183.6 190.0 196.7 203.6 210.7 218.1
662.4 1,028.4 1,064.4 1,101.6 1,140.2 1,180.1 1,221.4 1,264.1 1,308.4

20.70 21.42 22.17 22.95 23.75 24.59 25.45 26.34 27.26

2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000
41,400 42,849 44,349 45,901 47,507 49,170 50,891 52,672 54,516
473 509 545 582 618 618 618 618 618
19,570.9 21,814.0 24,190.2 26,706.0 29,368.2 30,396.1 31,460.0 32,561.1 33,700.7

20,233.3 22,842.4 25,254.6 27,807.6 30,508.4 31,576.2 32,681.4 33,825.2 35,009.1

7.8% 7.8% 7.8% 7.8% 7.8% 7.8% 7.8% 7.8% 7.8%

47.6x 47.6x 47.6x 47.6x 47.6x 47.6x 47.6x 47.6x 47.6x

37.6x 37.6x 37.6x 37.6x 37.6x 37.6x 37.6x 37.6x 37.6x
34.2x 34.2x 34.2x 34.2x 34.2x 34.2x 34.2x 34.2x 34.2x

0.38 0.39 0.40 0.42 0.43 0.45 0.46 0.48 0.50

0.06 0.06 0.06 0.06 0.05 0.05 0.05 0.05 0.05

3.15%

0.34%
Historical Ratio Analysis
2003 2004 2005 2006 2007 Assignment by GROUP 3:
Profitability Ratios 36BM05 Adarsh
Profit Margin 5.7% 6.0% 3.4% 5.7% 5.7% 36BM30 K.Abhinav
Return on Assets (ROA) 8.6% 9.4% 5.6% 9.7% 10.1% 36BM27 Khushbu
Return on Equity (ROE) 14.2% 14.9% 8.5% 14.3% 14.4% 36BM49 Shashwat
Return on Invested Capital (ROIC) 10.9% 12.0% 7.6% 12.3% 12.5% 36BM22 Harsh
Gross Margin 19.5% 20.5% 15.5% 19.3% 18.0% 36BM52 Sudhanshu

Asset Management Ratios

Accrount Receivable Turnover 8.11 7.76 7.45 7.30 7.30
Inventory Turnover 7.02 7.45 8.11 8.29 8.29
Current Asset Turnover 4.06 4.08 4.06 4.06 4.11
PP&E Turnover (Fixed Asset Turnover) 2.50 2.68 2.89 3.14 3.33
Total Asset Turnover 1.49 1.56 1.63 1.71 1.79

Liability and Liquidity Ratios

Current Ratio 2.94 2.96 2.81 2.94 2.85
Quick Ratio (Asset Test) 1.57 1.67 1.62 1.78 1.69
Cash Ratio 0.10 0.11 0.09 0.15 0.09
Total Debt Ratio 0.40 0.37 0.35 0.32 0.30
Debt-to-Equity Ratio 0.66 0.58 0.54 0.47 0.42
Equity Multiplier 1.7x 1.6x 1.5x 1.5x 1.4x
Times Interest Earned Ratio 9.75 10.45 6.64 12.32 20.42
Cash Coverage Ratio 10.98 11.52 7.66 13.43 22.27
Capital Intensity 0.67 0.64 0.61 0.58 0.56
Assignment by GROUP 3:
36BM05 Adarsh
36BM30 K.Abhinav
36BM27 Khushbu
36BM49 Shashwat
36BM22 Harsh
36BM52 Sudhanshu
Year: 2007
Company: Market Value Net Debt Enterprise Value Equity Beta Revenue
Cathleen Sinclair 298.9 1,329.6 1,628.5 2.22 1,346.8
General Health & Beauty 319.3 63.1 382.4 1.95 446.1
Women's Care Company 498.6 55.3 553.9 1.14 397.3
Skin Care Enterprises 1,204.2 371.8 1,576.1 1.35 1,247.6
Average (Excluding Cathleen Sinclair) 674.0 163.4 837.5 1.5 697.0
Median (Excluding Cathleen Sinclair) 498.6 63.1 553.9 1.4 446.1
Max (Excluding Cathleen Sinclair) 1,204.2 371.8 1,576.1 2.0 1,247.6
Min (Excluding Cathleen Sinclair) 319.3 55.3 382.4 1.1 397.3
Hansson Private Label 406.9 107.6 514.5 1.36 680.7

Company: EBITDA/Revenue EBIT/Renevue Earnings/Revenue EV/Revenue EV/EBITDA

Cathleen Sinclair 19.0% 12.1% 1.6% 1.2x 6.4x
General Health & Beauty 13.9% 11.6% 5.3% 0.9x 6.2x
Women's Care Company 13.3% 12.4% 19.4% 1.4x 10.5x
Skin Care Enterprises 12.5% 10.1% 5.2% 1.3x 10.1x
Average (Exluding Cathleen Sinclair) 13.2% 11.4% 10.0% 1.2x 8.9x
Median (Excluding Cathleen Sinclair) 13.3% 11.6% 5.3% 1.3x 10.1x
Max (Excluding Cathleen Sinclair) 13.9% 12.4% 19.4% 1.4x 10.5x
Min (Excluding Cathleen Sinclair) 12.5% 10.1% 5.2% 0.9x 6.2x
Hansson Private Label 10.8% 9.9% 5.7% 0.8x 7.0x
EBITDA EBIT Net Income Book Value
255.3 163.4 21.5 (1,112.8)
61.9 51.9 23.8 204.2
52.7 49.3 77.0 43.7
155.8 125.4 65.3 316.2
90.1 75.6 55.4 188.0
61.9 51.9 65.3 204.2
155.8 125.4 77.0 316.2
52.7 49.3 23.8 43.7
73.5 67.4 38.5 267.9

EV/EBIT P/E P/B

10.0x 13.9x NM
7.4x 13.4x 1.6x
11.2x 6.5x 11.4x
12.6x 18.4x 3.8x
10.4x 12.8x 5.6x
11.2x 13.4x 3.8x
12.6x 18.4x 11.4x
7.4x 6.5x 1.6x
7.6x 10.6x 1.5x
Time Period 0 1 2 3 4 5 6 7
2008 2009 2010 2011 2012 2013 2014 2015
Operating Results:
Revenue 84,960 93,881 103,124 112,700 122,618 132,887 135,545
Less: Raw Material Costs 45,120 49,369 53,698 58,109 62,603 67,181 67,852
Less: Labor Expense 18,640 20,233 22,842 25,255 27,808 30,508 31,576
Less: Manufacturing Overhead 3,600 3,708 3,819 3,934 4,052 4,173 4,299
Less: Maintenance Expense 2,250 2,318 2,387 2,459 2,532 2,608 2,687
Less: Selling, General & Administrative Expense 6,627 7,323 8,044 8,791 9,564 10,365 10,573
EBITDA 8,723 10,930 12,334 14,154 16,059 18,051 18,559
Less: Depreciation 4,000 4,000 4,000 4,000 4,000 4,000 4,000
EBIT 4,723 6,930 8,334 10,154 12,059 14,051 14,559
Less: Taxes 1,889 2,772 3,334 4,061 4,824 5,620 5,823
NOPAT 2,834 4,158 5,000 6,092 7,235 8,431 8,735

Un-Levered Free Cash Flow

NOPAT 2,834 4,158 5,000 6,092 7,235 8,431 8,735
Plus: Depreciation 4,000 4,000 4,000 4,000 4,000 4,000 4,000
Less: Change in Net Working Capital 12,865 1,473 1,443 1,529 1,586 1,644 425
Plus: Net Working Capital Recovery
Less: Initial Investment 45,000
Un-Levered Free Cash Flow (45,000) (6,031) 6,685 7,558 8,563 9,649 10,787 12,310

Cost of Capital (Discount Rate) 9.38% Chosen as the most appropriate discount rate from potential discount rates in WACC sh
PV of Un-Levered Free Cash Flow (45,000) (5,514) 5,588 5,775 5,982 6,164 6,299 6,573
Cumulative Free Cash Flow (45,000) (50,514) (44,926) (39,151) (33,168) (27,005) (20,705) (14,133)

NPV 12,255 Tucker Hansson should proceed with the investment as the project generates a positive N
IRR 13%
Payback Period (Break even point) 9.15

Accounts Receivable 11,234 12,413 13,635 14,901 16,213 17,571 17,922

Plus: Inventory 8,874 9,805 10,771 11,771 12,807 13,879 14,157
Less: Accounts Payable 7,243 7,880 8,625 9,362 10,123 10,909 11,114
Net Working Capital 12,865 14,338 15,781 17,310 18,896 20,541 20,965
 8 9 10
2016 2017 2018 Assignment by GROUP 3:
36BM05 Adarsh
138,256 141,021 143,841 36BM30 K.Abhinav
68,531 69,216 69,908 36BM27 Khushbu
32,681 33,825 35,009 36BM49 Shashwat
4,428 4,560 4,697 36BM22 Harsh
2,767 2,850 2,936 36BM52 Sudhanshu
10,784 11,000 11,220
19,065 19,569 20,071
4,000 4,000 4,000
15,065 15,569 16,071
6,026 6,228 6,429
9,039 9,342 9,643

9,039 9,342 9,643

4,000 4,000 4,000
432 440 447
22,284

12,607 12,902 35,480

om potential discount rates in WACC sheet Exhibit 7

6,154 5,758 14,476
(7,979) (2,221) 12,255

ment as the project generates a positive NPV.

18,280 18,646 19,019

14,440 14,729 15,023
11,323 11,538 11,758
21,397 21,837 22,284
Revenue (Cashflow) NPV Variance/Sensitivity (measured by
standard deviation)
Original Assumption+10% Utilization rate assumption *1.1 20,776
Original Assumption Original utilization rate assumption 12,255 8521
Original Assumption-10% Utilization rate assumption *0.9 3,734

Original Assumption+10% Selling Price Per Unit - Growing at 2.0%*1.1 15,548

Original Assumption Selling Price Per Unit - Growing at 2.0% 12,255 3276
Original Assumption-10% Selling Price Per Unit - Growing at 2.0%*0.9 8,996

Costs (Cashflow) NPV Variance/Sensitivity (measured by

standard deviation)
Original Assumption+10% Average Fully Loaded Hourly Cost at 3.5%*1.1 10,840
Original Assumption Average Fully Loaded Hourly Cost at 3.5% 12,255 1403
Original Assumption-10% Average Fully Loaded Hourly Cost at 3.5%*0.9 13,646

Original Assumption+10% Raw Materials Per Unit Growing at 1.0%*1.1 11,339

Original Assumption Raw Materials Per Unit Growing at 1.0% 12,255 914
Original Assumption-10% Raw Materials Per Unit Growing at 1.0%*0.9 13,167

Working Capital NPV Variance/Sensitivity (measured by

standard deviation)
10% increase: 47.6*1.1 11,493
Days Sales Outstanding Original Assumption (47.6) 12,255 763
10% decrease: 47.6*0.9 13,018

10% increase: 37.6*1.1 11,653

Days Sales Inventory Original Assumption (37.6) 12,255 602
10% decrease: 37.6*0.9 12,857

10% increase: 34.2*1.1 12,734

Days Payable Outstanding Original Assumption 34.2 12,255 479
10% decrease: 34.2*0.9 11,777

WACC (Risk) NPV Variance/Sensitivity (measured by

standard deviation)
Original Assumption+10% 9.38%*1.1 8,723
Original Assumption 9.38% 12,255 3486
Original Assumption-10% 9.38*0.9 15,695

Initial Investment NPV Variance/Sensitivity (measured by

standard deviation)
Original Assumption+10% 10% increase 45000*1.1 7,755
Original Assumption Initial Investment of 45000 12,255 4500
Original Assumption-10% 10% decrease 45000*0.9 16,755

Equity Beta NPV Variance/Sensitivity (measured by

standard deviation)
Original Assumption+10% 10% increase: 1.36*1.1 10,304
Original Assumption Initial Equity Beta of 1.36 12,255 2029
Original Assumption-10% 10% decrease: 1.36*0.9 14,360