Business Valuation of Polo Ralph Lauren Corporation - Mark Moore ...

eally going. Past behaviors do not dictate future events for a company. There are severalunknown factors within and outside the organization that could have an impact on futurenumbers. As time progresses over the forecast, the numbers are more likely to deviatefrom the actual results because of the introduction of new factors and the inaccuracies ofhuman error. However, many of the major items have involved a detectable pattern from2000-2004. These items should be well forecasted for the next few years, but losecredibility over time.Polo Ralph Lauren is likely to mature over the years to come as a healthy retailcompany. Forecasts based on values and ratios of the past five years indicate that if RalphLauren continues to operate in the manner they are, increased sales and profits are in thenear future. The company is in a good, safe position and is likely to maintain its financialhold on itself.Forecasts(In millions of dollars) Annual Income StatementForecast Income Statement2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Revenue 1955.5 2225.8 2363.7 2439.3 2649.7 2874.9 3104.9 3353.3 3604.8 3875.2 4165.8 4457.4 4769.4 5103.3 5460.5Cost 1002.4 1162.8 1216.9 1231.7 1326.4 1469.7 1587.2 1714.2 1842.8 1981.0 2129.6 2278.6 2438.1 2608.8 2791.4Profit 953.1 1063.0 1146.8 1207.6 1323.3 1405.3 1517.7 1639.1 1762.0 1894.2 2036.2 2178.8 2331.3 2494.5 2669.1Operating Expenses 1961.6 2108.6 2070.5 2150.9 2375.9 2529.9 2732.3 2950.9 3172.2 3410.2 3665.9 3922.5 4197.1 4490.9 4805.3Operating Income 263.9 117.2 293.2 288.4 273.8 279.8 288.2 296.9 305.8 314.9 324.4 334.1 344.1 354.5 365.1Tax and Extra. Items 120.4 57.9 120.7 114.2 102.8 111.9 115.3 118.7 122.3 126.0 129.8 133.7 137.7 141.8 146.0Net Income 143.5 59.3 172.5 174.2 171.0 167.9 172.9 178.1 183.5 189.0 194.6 200.5 206.5 212.7 219.1Pro Forma Income StatementForecast Pro Forma Income Statement2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Revenue 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%Cost 51.3% 52.2% 51.5% 50.5% 50.1% 51.1% 51.1% 51.1% 51.1% 51.1% 51.1% 51.1% 51.1% 51.1% 51.1%Profit 48.7% 47.8% 48.5% 49.5% 49.9% 48.9% 48.9% 48.9% 48.9% 48.9% 48.9% 48.9% 48.9% 48.9% 48.9%Operating Expenses 100.3% 94.7% 87.6% 88.2% 89.7% 88.0% 88.0% 88.0% 88.0% 88.0% 88.0% 88.0% 88.0% 88.0% 88.0%Operating Income 13.5% 5.3% 12.4% 11.8% 10.3% 9.7% 9.3% 8.9% 8.5% 8.1% 7.8% 7.5% 7.2% 6.9% 6.7%Tax and Extra. Items 6.2% 2.6% 5.1% 4.7% 3.9% 3.9% 3.7% 3.5% 3.4% 3.3% 3.1% 3.0% 2.9% 2.8% 2.7%Net Income 7.3% 2.7% 7.3% 7.1% 6.5% 5.8% 5.6% 5.3% 5.1% 4.9% 4.7% 4.5% 4.3% 4.2% 4.0%Growth continuation is clearly visible in the forecast income statements. The percentagesin the pro forma income statement are relatively unchanged27