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
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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.
