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