Teuer Furniture
The rst assumption that we need to make is about their growth rate. The fact that Teuer will be opening
new stores in 2012 will aect their growth rate. In 2012, they’ll open three more showrooms and
following that they will open six additional showrooms over the next three years. The growth rate in
2012 was 11%. We will hold this growth rate for 2013, because the three new showrooms that are
opening will keep this growth rate high. These show rooms will make up for the decrease in growth rate
of the maturing showrooms. Teuer Furniture stated that they wanted to open a total of six new
showrooms over the next three years. With this, we conclude that there will be two showrooms opened
per year. A)er the year 2018, there will be a decrease in constant growth rate from 11% to about 3.5%.
The gross margin for 2012 was calculated to be 58%. We kept this constant because the growth margins
should not be changing, since all showrooms appeal to the same demographic and we had no reason to
believe otherwise. However, if more e-ciencies are created as time goes on, assuming everything else
stays the same, the gross margin should actually increase. If no e-ciencies are created, any increase in
income will be the result of an increase in sales (assuming the increase in showrooms will not create any
cannibalization).
Line items such as SG&A and advertising are aected by our growth rate. By 2018, the company’s
income will be reliant of their current customer base. There will be less of a need for advertising, as the
company currently relies mostly o of word of mouth.
Given the sizes of the showrooms that are to be opened, we were able to approximate the lease
expenses.
In forecasting the balance sheet, each line item is a function of revenue. When rst starting out, Teuer
Furniture had an extremely high accounts payable to sales ratio, because they needed to accumulate
inventory. However, the revenues were not enough to cover the costs. Therefore, they needed to initially
defer payments to their suppliers. Over time as their revenue and sales increased, they were able to
increase their bargaining power to their suppliers. This in turn allowed them to decrease their accounts