Assumptions

$2020$E $2021$E $2022$E $2023$E $2024$E

Total streams $12,11715,75218,90322,68326,085$

Master royalty rate per stream $$0\mathrm{.}0038$ $$0\mathrm{.}0038$ $$0\mathrm{.}0039$ $$0\mathrm{.}0039$ $$0\mathrm{.}0040$

Growth rate for physical$/$digital sales $0\%0\%0\%0\%$

COGS percentage for physical sa $50\mathrm{.}9\%50\mathrm{.}9\%50\mathrm{.}9\%50\mathrm{.}9\%50\mathrm{.}9\%$

Revenue$-$sharing rate with artist $21\mathrm{.}6\%21\mathrm{.}6\%21\mathrm{.}6\%21\mathrm{.}6\%21\mathrm{.}6\%$

Revenue$-$sharing rate with Braun $3\mathrm{.}0\%3\mathrm{.}0\%3\mathrm{.}0\%3\mathrm{.}0\%$

Other operating expenses percen $31\mathrm{.}3\%31\mathrm{.}3\%31\mathrm{.}3\%31\mathrm{.}3\%31\mathrm{.}3\%$

Account receivable days $80\mathrm{.}380\mathrm{.}380\mathrm{.}380\mathrm{.}380\mathrm{.}3$

Inventory days $30\mathrm{.}130\mathrm{.}130\mathrm{.}130\mathrm{.}130\mathrm{.}1$

Accrued royalties days $87\mathrm{.}787\mathrm{.}787\mathrm{.}787\mathrm{.}787\mathrm{.}7$

Accounts payable days $42\mathrm{.}442\mathrm{.}442\mathrm{.}442\mathrm{.}442\mathrm{.}4$

Net fixed asset turnover $21\mathrm{.}921\mathrm{.}921\mathrm{.}921\mathrm{.}921\mathrm{.}9$

Income Statement

$2020$E $2021$E $2022$E $2023$E $2024$E

Royalty revenue from streaming $37\mathrm{.}359\mathrm{.}972\mathrm{.}988\mathrm{.}8103\mathrm{.}7$

Revenue from physical and other $10\mathrm{.}910\mathrm{.}910\mathrm{.}910\mathrm{.}910\mathrm{.}9$

Total revenue $48\mathrm{.}270\mathrm{.}883\mathrm{.}899\mathrm{.}7114\mathrm{.}6$

Cost of physical sales $5\mathrm{.}65\mathrm{.}65\mathrm{.}65\mathrm{.}65\mathrm{.}6$

Royalty sharing with artist $10\mathrm{.}415\mathrm{.}318\mathrm{.}121\mathrm{.}524\mathrm{.}7$

Royalry sharing with Braun $2\mathrm{.}12\mathrm{.}53\mathrm{.}03\mathrm{.}4$

Other operating expenses $15\mathrm{.}122\mathrm{.}226\mathrm{.}331\mathrm{.}235\mathrm{.}9$

Operating profit $17\mathrm{.}225\mathrm{.}731\mathrm{.}438\mathrm{.}445\mathrm{.}0$

Balance Sheet Items

$2020$E $2021$E $2022$E $2023$E $2024$E

Accounts receivable $10\mathrm{.}615\mathrm{.}618\mathrm{.}421\mathrm{.}925\mathrm{.}2$

Inventory $0\mathrm{.}90\mathrm{.}90\mathrm{.}90\mathrm{.}90\mathrm{.}9$

Accrued royalties payable $2\mathrm{.}53\mathrm{.}74\mathrm{.}35\mathrm{.}25\mathrm{.}9$

Accounts payable $2\mathrm{.}43\mathrm{.}23\mathrm{.}74\mathrm{.}34\mathrm{.}8$

Net fixed assets $2\mathrm{.}23\mathrm{.}23\mathrm{.}84\mathrm{.}65\mathrm{.}2$

Source: Author analysis.

$2025$E $2026$E

$28,69431,563$

$$0\mathrm{.}0040$ $$0\mathrm{.}0041$

$0\%0\%$

$50\mathrm{.}9\%50\mathrm{.}9\%$

$21\mathrm{.}6\%21\mathrm{.}6\%$

$3\mathrm{.}0\%3\mathrm{.}0\%$

$31\mathrm{.}3\%31\mathrm{.}3\%$

$80\mathrm{.}380\mathrm{.}3$

$30\mathrm{.}130\mathrm{.}1$

$87\mathrm{.}787\mathrm{.}7$

$42\mathrm{.}442\mathrm{.}4$

$21\mathrm{.}921\mathrm{.}9$

$2025$E $2026$E

$115\mathrm{.}7129\mathrm{.}2$

$10\mathrm{.}910\mathrm{.}9$

$126\mathrm{.}6140\mathrm{.}1$

$5\mathrm{.}65\mathrm{.}6$

$27\mathrm{.}330\mathrm{.}2$

$3\mathrm{.}84\mathrm{.}2$

$39\mathrm{.}743\mathrm{.}9$

$50\mathrm{.}356\mathrm{.}2$

$2025$E $2026$E

$27\mathrm{.}830\mathrm{.}8$

$0\mathrm{.}90\mathrm{.}9$

$6\mathrm{.}67\mathrm{.}3$

$5\mathrm{.}35\mathrm{.}7$

$5\mathrm{.}86\mathrm{.}4$

Critique the base$-$case financial forecast in case Exhibit $10.$ Do you believe it to be a reasonable forecast of the financial outcomes? If not, what are your specific concerns?