Crocs Inc., Harvard Case Solution & Analysis

Crocs Inc., Case Study Solution

Exhibit-2: P/E Ratio of Comparable Companies

 

Exhibit-3: Reasons for Decline in Share Price

Exhibit-4: Ratio Analysis

Ratio Analysis
  2005 2006 Comments
Liquidity Ratios
Current Ratio 1.2 2.7 Improving
Quick Ratio 0.6 1.7 Improving
 Asset Management Ratios
Inventory Turnover 136 Average
Asset Turnover 194 Average
Account Receivable Turnover 99 Good
Profitability Ratios
ROE 90% 31% Declining
Net Profit Margin 16% 18% Increasing
Gross Profit Margin 56% 57% Good
Solvency Ratios
Debt Ratio 4% 0.04% Irrational
Debt to Equity Ratio 18.1% 0.1% Irrational
Other
Dividend Payout Ratio 1.6% 0.1% Unsatisfactory
DPS 5.4 0.4 Unsatisfactory
EPS 332.8 863.5 Excellent

Exhibit-5: Trend of Ratios

Exhibit-6: DCF Valuation

Revised DCF Valuation
  2006 2007 2008 2009 2010 2011 2012
Revenues 355 831 997 1196 1376 1582 1740
Cost of Sales 154 342 429 514 605 712 783
Gross Profit 201 488 568 682 770 870 957
SG&A 105 251 309 383 454 522 574
Operating Income 95 238 259 299 316 348 383
               
NOPAT (tax at 30%) 29 71 78 90 95 104 115
Ch NWC     -8 26 36 41 32
Ch NPPE     16 16 18 21 16
Free Cash Flows     84 66 62 66 67
Discounting Periods     1 2 3 4 5
Discounted Cash Flow     76 53 45 44 40
Growth % 227% 134% 20% 20.00% 15.00% 15.00% 10.00%
COGS/Sales% 43.50% 41.20% 43.00% 43.00% 44% 45% 45%
SG&A As % of Sales 29.70% 30.20% 31% 32% 33% 33% 33%
NWC as % of sales 41.30% 26.60% 21% 20% 20% 20% 20%
NFAssets as % of sales 16% 11% 10% 10% 10% 10% 10%
Depreciation as % of NFA 13.80% 24% 15% 15% 15% 15%  
NWC 147 221 213 239 275 316 348
NFA 58 87 104 120 138 158 174
Depreciation and ammortization 8 21 16 18 21 24 0
EBITDA 103 259 275 317 337 372 383
Net Income Loss 67 166 181 209 221 244 268
EPS 1 2 2 2 3 3 3
Discount Rate 10.96%            
Terminal Value 1187            
Present Value of TV 706            
PV Planning $258.53            
Enterprise Value $964.40            
Shares Outstanding 85            
Price Per Share $11.35            
P/E Multiple         24.40            

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