Financial statement analysis | Accounting homework help

 
   

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The first step in the financial statement forecasting is to project sales and other

operating activities. Sales numbers are determined by both a volume component and

price component. Projecting prices depends on factors specific to the firm and its

BUS 622 Syllabus

18 of

industry that might affect demand and price elasticity. For the following types of firms,

discuss whether it would be likely that the firm would be able to project future prices:

a. A firm in a capital-intensive industry that is expected to operate near capacity for the

near future.

b. A firm in an industry that is expected to experience numerous technological

improvements.

c. A firm with products that are transitioning from the growth to maturity phase of the

product life cycle.

d. A firm that has established a well-known brand name and image.