question archive As a potential investor for a new venture, you decide to look over the firm's pro forma financial statements to see if it is worth investing your money
As a potential investor for a new venture, you decide to look over the firm's pro forma financial statements to see if it is worth investing your money
Subject:FinancePrice: Bought3
As a potential investor for a new venture, you decide to look over the firm's pro forma financial statements to see if it is worth investing your money. You notice that the entrepreneurs have listed some revenue and cost figures based on three different potential scenarios.
Worst Probable Best
Units sold 300,000 500,000 1,000,000
Revenues 4,500,000 7,500,000 15,000,000
Total Costs 800,000 1,200,000 2,200,000
The entrepreneurs assure you that they are using the average cost structure that industry participants currently face and have included all costs and expenses in their calculations.
a) Do the above figures tell you anything about threat of new entrants? If so, what do they suggest and why?
b) Do the above figures tell you anything about the power of suppliers? If so, what do they suggest and why?
c) Do the above figures tell you anything about the degree of rivalry? If so, what do they suggest and why?
