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2016 PwC Case Competition
The future of Greenlight
--Sunshine Group
2 Nov 2016
Cynthia Morris
Qiaochu (Kelly) Geng
Yi (Zoe) Li
Yuxuan(Lily) Chi
Overview
Situation Environmental issues
Impacts Penalties; Reputation; Long-term sustainability
Goals Restoring the reputation; Sustainability
What are the
options & Cost-
Benefit Analysis
Impacts on
Financial
Statements & Tax
How can PwC
help
Q & A
What are the options?
Investing
internally –
building a
similar
capability “ in
house”
Option A
Purchasing
RubberUp as a
subsidiary
Option B
OR
Purchasing
RubberUp as a
subsidiary
Option B
Option B Revenue Multiple
Company RubberUp A B C D E F G
Revenue 7.0 4.7 3.2 0.8 5.4 3.1 2.7 3.5
Cash Flow 0.3 0.7 0.3 0.2 0.6 0.7 0.4 0.5
Inventory 0.5 0.3 0.25 0.1 1.3 0.1 0.2 0.3
# of
Employees 50.0 55.0 38.0 9.0 50.0 18.0 12.0 12.0
Ask Price 4.5 3.2 1.5 0.5 3.9 2.2 1.6 2.5
Ask Price/
Revenue 68% 47% 56% 72% 71% 60% 71%
Average
Multiples 64%
Revenue of RubberUp *Average multiple= 4.5 Million
All numbers in Millions; Comparable companies data sources: BizBuySell.com
Cost-Benefit Analysis
Option A Option B
Cost
• Time consuming:
1. Equipment
2. Operation
3. Labor
• Barrier to entry
• Acquisition cost: $4.45 M
• Labor transition
Benefit
• Start up, R&D cost:
$1.85-$2.25 M
• Choice of factory
location
• Create a reputation
• Quick action and immediate utility
• Easy and efficient management
• Increase core competition ability
• Expand market coverage
• Restore the reputation in a short
period
Impact on Financial Statements
Greenlight
Cash Flow Summary (in thousands)
2014 2015 Consolidated 2015
Starting: Cash & Equivalent $4151.4 $5,754.5 $5,754.5
Net Cash Provided by Op 2814.7 4,059.9 4,359.9
Net Cash Used in Investment (270.1) (297.8) (4,747.8)
Net Cash Used in Fin (941.5) (1,720.2) (1,720.2)
Change in Cash & Equivalent 1603.1 2,041.9 (2,108.1)
Ending: Cash & Equivalent $5754.5 $7,796.4 $3,646.40
Greenlight
Balance Sheet ( in thousands)
2014 2015 Consolidated 2015
Total Assets $15,293.0 $17,624.3 $18,624.3
Total Liabilities 11,506.9 11,553.7 12,553.7
Total Owner's Equity 3,786.1 6,070.6 6,070.6
Total Liabilities & Owners Equity $15,293.0 $17,624.3 $18,624.3
Impact on Financial Statements
Greenlight
Income Statement ( in thousands)
2014 2015 Consolidated 2015
Sales, net $26,798.7 $28,865.6 $35,865.6
Total Expenses 21,965.5 22,520.7 28,520.7
Operating Income 4,833.2 6,344.9 7,344.9
EBIT 4,799.4 6,312.7 7,312.7
Income Tax Expense 1,897.8 2,289.4 2,629.4
Net Income $ 2,901.6 $4,023.3 $4,683.3
Tax Implications: Minimal
• Federal: Greenlight will not suffer increase in tax rate
• Local: Companies will file as they always have
• RubberUp’s addition will not cause significant difficulty
How can PwC help?
Impairment
Tests
Tax
Valuations
Financial Analysis
& Derivatives
Valuation
Service
Consulting
Transform
Human
Capital
Operations
Risk
Management
Strategy
Consulting
Sustainable
Business
Solution
How can PwC help?
Thank you!
© 2012 PwC. All rights reserved.
“PwC” refers jointly to ZAO PricewaterhouseCoopers Audit, PricewaterhouseCoopers Russia B.V. and Representative Office of
PricewaterhouseCoopers Legal CIS B.V. or, as the context requires, other member firms of PricewaterhouseCoopers International
Limited(PwCIL). Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not
provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the
exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions of any other
member firm nor can it control the exercise of another member firm’s professional judgment or bind another member firm or PwCIL in any
way.
https://www.pwc.com/
PwC case PPT

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PwC case PPT

  • 1. 2016 PwC Case Competition The future of Greenlight --Sunshine Group 2 Nov 2016 Cynthia Morris Qiaochu (Kelly) Geng Yi (Zoe) Li Yuxuan(Lily) Chi
  • 2. Overview Situation Environmental issues Impacts Penalties; Reputation; Long-term sustainability Goals Restoring the reputation; Sustainability What are the options & Cost- Benefit Analysis Impacts on Financial Statements & Tax How can PwC help Q & A
  • 3. What are the options? Investing internally – building a similar capability “ in house” Option A Purchasing RubberUp as a subsidiary Option B OR Purchasing RubberUp as a subsidiary Option B
  • 4. Option B Revenue Multiple Company RubberUp A B C D E F G Revenue 7.0 4.7 3.2 0.8 5.4 3.1 2.7 3.5 Cash Flow 0.3 0.7 0.3 0.2 0.6 0.7 0.4 0.5 Inventory 0.5 0.3 0.25 0.1 1.3 0.1 0.2 0.3 # of Employees 50.0 55.0 38.0 9.0 50.0 18.0 12.0 12.0 Ask Price 4.5 3.2 1.5 0.5 3.9 2.2 1.6 2.5 Ask Price/ Revenue 68% 47% 56% 72% 71% 60% 71% Average Multiples 64% Revenue of RubberUp *Average multiple= 4.5 Million All numbers in Millions; Comparable companies data sources: BizBuySell.com
  • 5. Cost-Benefit Analysis Option A Option B Cost • Time consuming: 1. Equipment 2. Operation 3. Labor • Barrier to entry • Acquisition cost: $4.45 M • Labor transition Benefit • Start up, R&D cost: $1.85-$2.25 M • Choice of factory location • Create a reputation • Quick action and immediate utility • Easy and efficient management • Increase core competition ability • Expand market coverage • Restore the reputation in a short period
  • 6. Impact on Financial Statements Greenlight Cash Flow Summary (in thousands) 2014 2015 Consolidated 2015 Starting: Cash & Equivalent $4151.4 $5,754.5 $5,754.5 Net Cash Provided by Op 2814.7 4,059.9 4,359.9 Net Cash Used in Investment (270.1) (297.8) (4,747.8) Net Cash Used in Fin (941.5) (1,720.2) (1,720.2) Change in Cash & Equivalent 1603.1 2,041.9 (2,108.1) Ending: Cash & Equivalent $5754.5 $7,796.4 $3,646.40 Greenlight Balance Sheet ( in thousands) 2014 2015 Consolidated 2015 Total Assets $15,293.0 $17,624.3 $18,624.3 Total Liabilities 11,506.9 11,553.7 12,553.7 Total Owner's Equity 3,786.1 6,070.6 6,070.6 Total Liabilities & Owners Equity $15,293.0 $17,624.3 $18,624.3
  • 7. Impact on Financial Statements Greenlight Income Statement ( in thousands) 2014 2015 Consolidated 2015 Sales, net $26,798.7 $28,865.6 $35,865.6 Total Expenses 21,965.5 22,520.7 28,520.7 Operating Income 4,833.2 6,344.9 7,344.9 EBIT 4,799.4 6,312.7 7,312.7 Income Tax Expense 1,897.8 2,289.4 2,629.4 Net Income $ 2,901.6 $4,023.3 $4,683.3 Tax Implications: Minimal • Federal: Greenlight will not suffer increase in tax rate • Local: Companies will file as they always have • RubberUp’s addition will not cause significant difficulty
  • 8. How can PwC help? Impairment Tests Tax Valuations Financial Analysis & Derivatives Valuation Service
  • 10. Thank you! © 2012 PwC. All rights reserved. “PwC” refers jointly to ZAO PricewaterhouseCoopers Audit, PricewaterhouseCoopers Russia B.V. and Representative Office of PricewaterhouseCoopers Legal CIS B.V. or, as the context requires, other member firms of PricewaterhouseCoopers International Limited(PwCIL). Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions of any other member firm nor can it control the exercise of another member firm’s professional judgment or bind another member firm or PwCIL in any way. https://www.pwc.com/