# Case 3 Netscape

Páginas: 4 (966 palabras) Publicado: 7 de mayo de 2012
FINANCIAL MANAGEMENT

CASE CHAPTER 3: Netscape

GROUP 70
Ricardo Chvatal Calderón
Marta Giménez-Arnau Alcalá
Alejandro Luengo González
Juan Carlos Martínez ArandaAdrian Méndez Peña

*All the data is expressed in thousands instead of millions. In order to calculate the actual amount, multiply the results of the excel file by 1000.

Question 1

Whatshould the annual growth rate for the sales for the next 10 years be, in order to justify a Price of 28 dollars per share?

1. In order to calculate the sales of 1995 (33.250), we multiplied the salesfor the first 6 months, from the profit and loss account, of 1995 by 2. The sales from the following years (1996 to 2005) were calculated by multiplying the sales from the previous years by 1 plusthe growth rate we calculated afterwards. For year 2006 we used the growth rate of 4% we were given in the problem.

2. We calculated cost of sales by taking into account that they were 10,4% ofthe total amount of sales (in every year).

3. Gross margin was calculated by subtracting the cost of sales to the amount of sales in each year.

4. R&D expenses were constant at 36,8% ofthe sales, so we calculated them by applying this percentage to the sales of each period.

5. In order to obtain other operational expenses, we calculated the amount it decreased each year (10%)since we knew that in 1995 it was 80,9% and in 2005 had to be 20,9% of the total sales. Once we had the percentage, we just multiplied the total amount of sales by its corresponding percentage.6. EBIT was calculated by subtracting R&D expenses and other operational expenses to gross margin.

7. Taxes were 34% of EBIT. The reason why taxes were not applied to every year is thatNetscape is allowed to carry forward its losses. This means that it only pays taxes in those years in which EBIT has a positive vale (we used the “IF” function in excel to impose this condition)...

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