Part 1: Respond to the following discussion:
The percent of sales method is based on historical information. Giving consideration to the turbulent first decade of this century with wars and shortages of food and fuel, do you think that looking to the past is the best way to predict the future? Are there any alternatives or adjustments to the percent of sales method that you can suggest?
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Part 2: Respond to the follow classmate’s discussion:
“I’m a firm believer of using historical data, and using it in the percent of sales method should continue. While it can be said that certain conditions are verging on the unknown, we have had wars before, we have had fuel and food shortages before, we’ve had severe weather related disasters before. The way these events impacted businesses should be taken into account to help predict the future growth of a company based on the current economic and political climate we find ourselves in.
I don’t think it’s too much of a stretch to accurately forecast growth one year out or even two, but a five to ten year forecast becomes a little more difficult. By taking into consideration a multitude of data from global supply chains to regional weather trends, I think the percent of sales method could be much more accurate. “