FINA-4740 (01/02): Winter 2019
Group Case Questions
Due: April 3, 2019, at the beginning of class
Case: Lady M
1. How many cakes would Lady M need to sell in a year in order to break-even? Does this number
2. Assuming sales in year one are break-even, how quickly would sales need to grow after the first
year to pay the start-up costs within 5 years? Is this growth rate feasible? What is your
recommendation? Should Romaniszyn open the new location in the World Trade Center?
3. What is Lady M’s enterprise value? Does it matter if one uses an EBITDA multiple or a
perpetuity growth formula for a terminal value? How much of an equity stake should they be
giving up to the Chinese investors?
4. What do you think of Romaniszyn’s and Tom’s baseline assumptions? Are they realistic? Do
you think they should take the Chinese investors’ offer? Why or why not?
Hints: Support your arguments and answers with your own judgement and analysis. DO NOT
COPY FROM THE INTERNET!