Salesforce Inc Income Statement and Net Present Value analysis

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Group Case Study 1 Instructions

Complete a case study of Salesforce in the case section of the text https://bookshelf.vitalsource.com/books/9781307149...

A formal, in-depth case study analysis requires you to utilize the entire strategic management process. Assume your group is a consulting team asked by the Salesforce to analyze its external/internal environment and make strategic recommendations. You must include exhibits to support your analysis and recommendations.

Attached the answer to 11. Pro-Forma Financial Statements (I/S, B/S and Statement of Cash Flows) with deltas out 3 years and analysis each year must have 2 columns: 1 with your strategy and 1 without your strategy. Include Pro-Forma ratios for the first year out with deltas contrasting from the most current year’s ratios.

Need to complete 12,13 and 14

12. Net Present Value analysis of proposed strategy’s new cash flow and EPS/EBIT analysis
NOTE: To construct the first cash flow (cf₁) at the very minimum, the new revenue from your strategy(s) must be discounted back to the present value by calculating EBIT and that figure will be your cf_n for each year. cf₀ (initial cost of your strategy), cf₁ (discounted cash flow first year), r (opportunity cost of capital, the rate of the next best alternative use of cash/debt/equity resources).
13. Specific recommended strategy and long term objectives
Explain why you chose the strategy, and discuss how much the strategy will cost to implement and how much new revenue your strategy will create. Include your action timetable agenda for accomplishing your strategy.
14.Proposed new business model

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SIEBEL INCOME STATEMENT (2002-2005) Year Ended December, 31 Revenues Software license Professional services, maintenance and other Total revenues 2002 2003 2004 2005 $700.344 $482.274 $487.127 $480.493 934963 871954 852666 948647 $1.635.307 $1.354.228 $1.339.793 $1.429.140 Cost of revenues Software license Profesional services, maintenance and other Total cost of revenues Gross margin 21612 542938 564550 $1.070.757 18357 490006 508363 $845.865 13316 443585 456901 $882.892 22809 478072 500881 $928.259 368387 478816 119783 202398 310686 358318 106594 102310 5312 883220 ($37.355) 299051 337690 106541 6789 6000 754071 $128.821 285941 382351 107806 82629 10890 869617 $58.642 54.071 -10711 -14927 28.433 -8922 -3731 ($5.191) 47.765 64.216 -1019 46.746 175567 64899 $110.668 122858 53330 $69.528 Operating expenses Product development Sales and marketing General and administrative Restructuring and related expenses Purchased in-progress product develipmnet Total operating expenses Operating income (loss) Other income, net: Interest and other income, net Loss on early extinguishment of debt Interest expense Total income, net Income (loss) before income taxes Income tax provision (benefit) Net income (loss) 1169384 ($98.627) 58.491 -20016 38.475 -60152 -21345 ($38.807) RATIOS Change (2003- Change Change 2004) (2004-2005) Average $ Average 1,0% -1,4% -0,2% $483.298 -2,2% 11,3% 4,5% $891.089 -1,1% 6,7% 2,8% $1.374.387 2006 (Proforma) 479.638,71 991.547,35 1.469.175,90 -27,5% -9,5% -10,1% 4,4% 71,3% 7,8% 9,6% 5,1% 21,9% -0,8% -0,2% 4,8% $18.161 $470.554 $488.715 $885.672 27.807,51 474.010,90 499.635,40 972.424,94 -3,7% -5,8% 0,0% -93,4% 13,0% -14,6% -444,9% -4,4% 13,2% 1,2% 1117,1% 81,5% 15,3% -54,5% -4,1% 3,7% 0,6% 511,9% 47,2% 0,4% -249,7% $298.559 $359.453 $106.980 $63.909 $7.401 $835.636 $50.036 274.319,21 396.629,03 108.419,21 505.580,78 16.032,90 872.662,58 (87.767,73) -11,7% -100,0% -93,2% 64,4% -2067,8% -1839,5% -2231,9% 34,4% 11,4% -100,0% -96,6% -100,0% -17,8% -30,0% -1048,9% -17,8% -928,6% -37,2% -1134,5% $55.351 71.529,91 ($10.711) ($7.973) $37.590 $96.501 (1.165.812,37) $38.166 (441.913,55) $58.335 (719.300,15) Salesforce.com Inc Consolidated Balance Sheet Statement As at 31/12/20XX January 31, 2005 (unaudited) Assets Current assets Cash and cash equivalents Short-term marketable securities Accounts receivable Defferred commissions Prepaid expenses amd other current assets Total Current Assets Marketable securities, noncurrent Restricted cash Fixed assets, net Deferred commissions, concurrent Deferred income taxes, noncurrent Other assets Total Assets Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit) Current liabilities Accounts payable Accrued expenses and other current liabilities Income taxes payable Deferred income tax liabilities Deferred revenue Current portion of capital lease obligation Total Current Liabilities Capital lease obligations, net of current portion Long-term lease abandonment liability and other Minority interest Tota Liabilities Stockholders' Equity (Deficit) Common stock Additional paid-in capital Deferred stock-based compensation Notes receivables from stockholders January 31, 2006 (unaudited) $35.731 83.087 48.874 7.556 3.467 $178.715 $99.842 107.723 76.128 13.186 6.338 $303.217 87.120 3.191 7.637 2.057 0 1.779 280.499 89.227 24.216 3.889 10.416 3.784 434.749 $2.525 32.467 216 0 95.900 563 $131.671 $10.212 48.782 2.650 3.191 169.175 615 $234.625 721 184 1596 1380 $135.368 1.155 2.414 $238.378 105 217.248 -5.908 -727 111 237.010 -2.531 Accuulated other comprehensive income Accumulated deficit Total Stockholders' Equity (Deficit) Total Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit) -999 -64.588 145131 $280.499 -2.105 -36.114 196371 $434.749 RATIO Change (2005$ 2006) Average 179,4% $67.787 29,7% $95.405 55,8% $62.501 74,5% $10.371 82,8% $4.903 69,7% $240.966 2,4% -100,0% 217,1% 89,1% $88.174 $1.596 $15.927 $2.973 $5.208 112,7% $2.782 55,0% $357.624 304,4% 50,3% 1126,9% 2007 (Proforma) 278985,33 139663,78 118579,87 23010,931 11586,456 514453,45 91384,958 76785,997 7352,6111 10416 8048,7105 673823,05 $6.369 $40.625 $1.433 $1.596 76,4% $132.538 9,2% $589 78,2% $183.148 41300,968 73295,455 32511,574 3191 298437,75 671,80284 418079,08 -74,5% $453 46,957004 -27,6% $1.376 74,9% $1.897 76,1% $186.873 835,85526 4222,7507 419774,77 5,7% $108 117,34286 9,1% $227.129 258569,65 -57,2% ($4.220) -1084,2859 -100,0% ($364) 110,7% ($1.552) -4435,4605 -44,1% ($50.351) -20192,931 35,3% $170.751 265701,81 55,0% $357.624 673823,05 Salesforce Inc Consolidated Statement of Operations Fiscal Year Ended 31, January 2006 Revenues Subscription and support Professional services and other Total revenues Cost of revenues: Subscription and support Professional services and other Total cost of revenues Gross profit Operating expenses Research and Development Marketing and sales General and administrative Lease abandonment (recovery) Total operating expenses Income from operations Interest income Interest expense Other income (expense) Income before provision for income taxes and minority interest Provision for income taxes Income before minority interest Minority interest in consolidated joint venture Net Income 2005 2004 2003 RATIOS Change (20042005) $280.639 $157.977 29.218 18.398 $309.857 $176.375 $85.796 10.227 $96.023 $47.656 3.335 $50.991 84,1% 79,9% 83,7% 34.457 12.727 34.669 20.727 69.126 33.454 $240.731 $142.921 7.782 9.491 17.273 $78.750 7.199 3.164 10.363 $40.628 63,5% 118,4% 93,7% 81,5% 4.648 33.522 12.958 439 136.401 6.520 2.621 -37 12 6.962 54.600 16.915 -3.445 75.032 3.718 379 -22 164 41,1% 76,4% 78,9% -100,0% 81,8% 75,4% 591,6% 68,2% -92,7% 28.198 1.310 29.508 9.153 1.217 7.936 4.239 541 3.698 -10.008 -10.008 115,9% 125,0% 114,6% -1.034 $28.474 -590 $7.346 -184 $3.514 -292 $9.716 220,7% 109,0% 23.330 149.598 47.986 -285 220.629 20.102 7.657 9.822 96.311 30.268 51.128 -10.500 471 -77 98 RATIOS Change (2005- Change 2007 2006) Average $ Average (Proforma) 77,6% 58,8% 75,7% 80,9% $174.804 69,4% $19.281 79,7% $194.085 507642,89 49481,719 556752,21 170,7% 67,3% 106,6% 68,4% 117,1% $18.322 92,8% $21.629 100,2% $39.951 75,0% $154.134 74820,524 66850,631 138358,45 421187,04 137,5% 55,3% 58,5% 89,3% $13.371 65,9% $100.170 68,7% $31.723 -100,0% ($1.865) 71,8% $144.021 141,8% $10.113 391,8% $3.552 -15,9% ($30) 1732,8% $205 44164,64 248124,61 80971,297 0 378975,22 48614,273 37660,845 0 8046,1026 61,8% 208,3% 192,1% -100,0% 3558,3% 208,1% 7,6% 271,8% 162,0% 66,3% 193,2% $13.863 $1.023 $13.714 73878,397 2178,5007 86521,452 75,3% 287,6% 148,0% 198,3% ($603) -2563,8361 $13.111 84946,744
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SIEBEL INCOME STATEMENT (2002-2005)
Year Ended December, 31
Revenues
Software license
Professional services, maintenance and other
Total revenues

2002
2003
2004
2005
$700,344
$482,274
$487,127
$480,493
934963
871954
852666
948647
$1,635,307 $1,354,228 $1,339,793 $1,429,140

Cost of revenues
Software license
Profesional services, maintenance and other
Total cost of revenues
Gross margin

21612
542938
564550
$1,070,757

18357
490006
508363
$845,865

13316
443585
456901
$882,892

22809
478072
500881
$928,259

368387
478816
119783
202398

310686
358318
106594
102310
5312
883220
($37,355)

299051
337690
106541
6789
6000
754071
$128,821

285941
382351
107806
82629
10890
869617
$58,642

54,071
-10711
-14927
28,433
-8922
-3731
($5,191)

47,765

64,216

-1019
46,746
175567
64899
$110,668

122858
53330
$69,528

Operating expenses
Product development
Sales and marketing
General and administrative
Restructuring and related expenses
Purchased in-progress product develipmnet
Total operating expenses
Operating income (loss)
Other income, net:
Interest and other income, net
Loss on early extinguishment of debt
Interest expense
Total income, net
Income (loss) before income taxes
Income tax provision (benefit)
Net income (loss)

1169384
($98,627)

58,491
-20016
38,475
-60152
-21345
($38,807)

RATIOS
Change (2003- Change Change
2004)
(2004-2005) Average $ Average 2006 (Proforma)
1.0%
-1.4%
-0.2% $483,298
479,638.71
-2.2%
11.3%
4.5% $891,089
991,547.35
-1.1%
6.7%
2.8% $1,374,387
1,469,175.90

-27.5%
-9.5%
-10.1%
4.4%

71.3%
7.8%
9.6%
5.1%

21.9%
-0.8%
-0.2%
4.8%

$18,161
$470,554
$488,715
$885,672

27,807.51
474,010.90
499,63...