Analyze a Venture's Performance
The XYZ Company is a new company that operates furniture stores in the U.S. Its sales last year at its first furniture store were $2 million with a net profit of $120,000.
If the economy is robust next year, the company anticipates that its sales will increase by 35%.
If the economic growth is average next year, the company anticipates that its sales will increase by 18%.
If the economy is sluggish next year, the company anticipates that its sales will increase by 4%.
The firm hired an economist who forecasted the likelihood of a robust economy next year at 25%, an average economy at 45%, and a sluggish economy at 30%. The XYZ Company's net profit margins are also volatile.
If the economy is robust next year, the company anticipates that its net profit margin will be 9%
If the economic growth is average next year, the company anticipates that its net profit margin will be 5%
If the economy is sluggish next year, the company anticipates that its net profit margin will be 2%.
Here are your tasks:
Forecast the firm's average sales growth rate for next year.
Forecast the dollar amount of sales anticipated next year under each scenario, along with the expected value sales amount.
Forecast the dollar amount of net profit anticipated next year under each scenario, along with the expected value net profit amount.