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Campus: Date & Time:
Name: Roll No:
Case Study
Part 1
Your client is an investor and is considering buying privately held health club / fitness center (the “Subject Company”).
She wants to know the financial health of the Subject Company. She needs your help in performing a ratio analysis. Please help her navigate through the different type of ratios below.
Questions
1. Arrange the ratios mentioned below alongside their respective category, basis the categories given in the “available categories” table on the right.
Ratios Categories Available Categories
Interest coverage ratio Liquidity
Asset turnover ratio Solvency
Current ratio Profitability
EBITDA margin Efficiency
2. The Client has requested your help to calculate and interpret the above-mentioned ratios. Use information provided in Appendix 1 and Appendix 2. (Hint: Benchmark the Subject Company’s financial ratios against the comparable companies.)
Ratios Subject Company Value Interpretation
Interest coverage ratio
Asset turnover ratio
Current ratio
EBITDA margin
Part 2
The Client has decided to go ahead and buy the Subject Company. The client needs your help to estimate the equity value of the Subject Company using market approach as of June 30, 2024 (the “Estimate Date”).
Questions
1. Perform a benchmarking based on size, growth, and profitability (SGP) using relevant financial metrics and ratios (please mention the ones used in the first column of the below table) for the Subject Company in comparison to the selected comparable companies. Use market data provided in Appendix 2.
Highlight where the Subject Company lies with respect to the comparable companies, i.e. larger/higher or comparable or smaller/lower.
Particular Selection
Size Analysis:
Metric 1 - ___________________ Smaller/comparable/larger
Metric 2 - ___________________ Smaller/comparable/larger
Historical Growth Analysis:
Growth Rate 1 - ______________________ lower/comparable/higher
Growth Rate 2 - ______________________ lower/comparable/higher
Projected Growth Analysis:
Growth Rate 1 - ______________________ lower/comparable/higher
Growth Rate 2 - ______________________ lower/comparable/higher
Growth Rate 3 - ______________________ lower/comparable/higher
Growth Rate 4 - ______________________ lower/comparable/higher
Profitability Analysis:
Profit Margin 1 - ______________________ lower/comparable/higher
Profit Margin 2 - ______________________ lower/comparable/higher
2. Select an appropriate multiple for the Subject Company based on the SGP analysis performed above. Use market data provided in Appendix 2.
Particulars
Selected Multiple Type & Weighting a. Enterprise Value/LTM Revenue (XX%)
b. Enterprise Value/LTM EBITDA (XX%)
Rationale for selection of multiple type
Selected Value of Multiple

Selected Multiple Range (e.g., near median, between median and third quartile, etc.)
Rationale for Multiple Selection Size
Growth
Profitability
3. Adjust the concluded enterprise value (BEV) range to arrive at the equity value range of the Subject Company. Show your calculations. Use information for the Subject Company from Appendix 1.

Multiple
Metric
BEV
Add/Subtract: Cash and cash equivalents
Add/Subtract: Total debt
Equity Value
Part 3
Post the acquisition, the Client is considering buying an asset worth $200,000, which is being funded by debt (50%) and equity (50%).
Questions
1. What impact would this asset purchase have on the three financial statements?
Financial Statement Metric Impact Rationale
Balance Sheet Total Assets Increase/Decrease/No impact
Total Liabilities Increase/Decrease/No impact
Total Equity Increase/Decrease/No impact
Income statement Net Income Increase/Decrease/No impact
Cash flow statement Cash Flow from Operating Activities Increase/Decrease/No impact
Cash flow from Investing Activities Increase/Decrease/No impact
Cash flow from Financing Activities Increase/Decrease/No impact
2. The club is operating at a 90% capacity while the client wants to increase its efficiency to 100%, however she is concerned about the overhead costs. Please discuss the impact on the fixed costs in case the capacity increases to 100% from 90%.
Metric Impact Rationale
Fixed Costs Increase/Decrease/No impact
Appendices
Note: All information provided is as of the Estimate Date.
Appendix 1: Subject Company’s Financial Statements
Opening balance sheet (in US$ thousands)
Cash $969
Net receivables 1,302
Inventory 1,551
Other current assets 283
Total current assets 4,105

Net PP&E 3,900
Long term investments 382
Other assets 1,053
Total assets $9,440

Debt in current liabilities $249
Accounts payable 2,887
Other current liabilities 3,094
Total current liabilities 6,230

Long term debt 284
Other liabilities 801
Total liabilities 7,315

Total shareholder’s equity 2,125
Total liabilities and equity $9,440
LTM income statement (in US$ thousands)
Revenue $8,852
Cost of goods sold (7,034)
Gross profit 1,818

Operating expenses (545)
EBITDA 1,273

Depreciation & Amortization (763)
EBIT 510

Interest income (expense) (43)
Non-operating income (expense) (4)
Non-recurring income (expense) 17
Pre-tax income 480

Less: Income taxes (97)
Minority interest (17)
Net income $366
Historical and projected financials (in US$ thousands)
Revenue EBITDA
LTM $8,852 $1,273
FY 2022 6,148 591
FY 2023 8,494 1,048
FY 2024 10,000 1,236
FY 2025 11,947 1,482
Appendix 2: Comparable Companies’ Data
Financial information (in US$ millions):
Company Name Doleshole N.V. Bhaikibody plc Mr. Muscle, Inc. BB, Inc. Muscle Suscle, Inc.
Historical Revenue
FY 2023 Revenue 1,158 260 1,001 319 2,217
FY 2022 Revenue 849 208 879 245 1,823
LTM Revenue 1,212 260 1,036 327 2,408

1-Year Historical Revenue Growth 36.3% 24.7% 14.0% 30.1% 21.6%
Historical EBITDA
FY 2023 EBITDA 303 50 436 62 498
FY 2022 EBITDA 224 44 359 44 244
LTM EBITDA 328 50 461 62 566

1-Year Historical EBITDA Growth 35.3% 13.5% 21.5% 40.3% 103.9%
Projected Revenue
FY 2024 Revenue 1,318 276 1,132 348 2,514
FY 2025 Revenue 1,527 297 1,250 379 2,757
1-Year Projected Revenue Growth 13.9% 6.4% 13.1% 9.1% 13.4%
2-Year Projected Revenue Growth 14.9% 6.9% 11.7% 9.1% 11.5%
Projected EBITDA
FY 2024 EBITDA 632 102 472 138 611
FY 2025 EBITDA 763 110 529 161 674

1-Year Projected EBITDA Growth 108.8% 103.4% 8.2% 121.7% 22.8%
2-Year Projected EBITDA Growth 58.7% 47.7% 10.1% 60.8% 16.4%
Profitability Ratios
LTM EBITDA Margin 27.1% 19.3% 44.5% 19.0% 23.5%
FY 2024 EBITDA Margin 47.9% 36.9% 41.7% 39.6% 24.3%
BEV multiples
BEV / LTM Revenue BEV / LTM EBITDA
Doleshole N.V. 3.51x 12.97x
Bhaikibody plc 2.90x 15.03x
Mr. Muscle, Inc. 7.89x 17.74x
BB, Inc. 2.60x 13.69x
Muscle Suscle, Inc. 2.36x 10.03x
Financial ratios
Company Name Interest Coverage Ratio Asset Turnover Ratio Current Ratio EBITDA Margin
Doleshole N.V. 1.1x 0.4x 0.3x 27.1%
Bhaikibody plc 1.0x 0.4x 0.2x 19.3%
Mr. Muscle, Inc. 3.4x 0.4x 1.8x 44.5%
BB, Inc. 1.0x 0.6x 0.9x 19.0%
Muscle Suscle, Inc. 2.1x 0.3x 0.4x 23.5%
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